Bearish IEA Demand Outlook Could Pressure Prices

Angola falls back from leading oil production in Africa

Brent crude futures, the worldwide benchmark for oil prices, were down 78 cents, or 1.4%, at $56.16 late morning Thursday.

Prices rose 2 percent the day before to back above $50 a barrel.

According to the EIA, crude inventories fell by 2.7 million barrels in the week to October 6 compared with analysts' expectations for a decrease of 2 million barrels. The lowering of 2017 growth expectations should have been price-supportive, especially for WTI, but with this year nearing an end, attention will shift more to the output expectations for 2018, which at this point are bearish.

Angola's production, based on direct communication, was 1.657 million barrels per day, a monthly drop of 23,000 barrels, with no data from Nigeria in this case. Both benchmarks have risen more than 20 percent from their lows in June as world oil markets tightened.

Demand for Opec oil would be 32.5 million barrels per day in 2018 - around 150,000 bpd lower than the group pumped last month, The International Energy Agency said on Thursday.

Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt, said the tone of the IEA report was bearish because it suggested that demand for OPEC crude next year would not be sufficient to absorb all the available supplies. The rebound in U.S. oil production this year, reversing an annual decline of around 550,000 b/d recorded in 2016 - the first drop after seven successive years of growth - has been a major factor eroding the impact of the 1.72 million b/d of production cuts pledged by 22 OPEC and non-OPEC producers in a bid to rebalance the market starting January, and now in effect until March 2018.

The OPEC-led deal helped lift oil from below $30 a barrel early previous year. S. inventories and a falloff in weekly production on Thursday.

"Our forecast of global demand growth remains unchanged at 1.6 million barrels per day in 2017, or 1.6 percent, and 1.4 million barrels per day in 2018, or 1.4 percent", said the report. For 2018, oil demand is expected to rise by 420,000 bpd vs 400,000 bpd previously.

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