Despite Strong Supply, Crude Oil Prices in Asian Markets are Relatively Stable
By : Abraham Sihombing And Aldo Bella Putra | Monday, August 14 2017 - 17:03 IWST
INDUSTRY.co.id - Singapore - Brent crude oil fell 2 cents to $ 52.08 a barrel on Monday (14/08/2017) this morning in Singapore. Meanwhile, West Texas Intermediate (WTI) crude oil rose 3 cents to $ 48.85 a barrel.
According to Reuter’s reports, the second range of crude oil prices this morning in Asian markets is relatively stable as it is supported by strong demand and depreciation of crude oil inventories in the United States (US). Nevertheless, the condition is still depressed by the high supply of crude oil into the global market.
In fact, the International Energy Agency (IEA) announced that crude oil stocks are currently below the 2016 level. Nevertheless the IEA considers that the fixed stock of 219 million barrels represents stocks above the average in the past five years. Stocks of that amount are the amount targeted by OPEC in an agreement to cut crude oil production of its member countries.
The IEA also increased its 2017 demand growth projection to 1.5 million barrels per day (bpd) from 1.4 million bpd in its previous monthly report. In fact, the IEA also expects the demand to rise again by 1.4 million bpd next year.
Despite strong demand, the market remains flooded with supply. It is driven by abundant production. One of them is shale-oil production in the largest US oil field that is predicted to soar by 300,000 bpd in December 2017.
Oil production from Permian Basin, West Texas and New Mexico, is closely watched. The reason, low production costs and rapid growth has hampered OPEC's efforts to cut crude supplies to the global market.
In its report Friday (11/08/2017), Baker Hughes, a US energy services company, revealed that American energy companies have increased the operation of three rigs for the second time in three weeks. With these additions, there are 768 rings operating in all three crude oil mining centers.
In addition, the report said, the condition is expected to extend the recovery of oil drilling activities in the next 15 months. Nevertheless, the rate of increase has decreased in recent months. That's because energy companies are reducing their budgets in response to a fall in crude oil prices to below $ 50 a barrel. (Abraham Sihombing)