While Florida and the rest of the Gulf Coast deal with the aftermath of Hurricane Harvey and Irma and the energy markets assess the short-term demand destruction, in the bigger picture for energy, we are getting very bullish data in supply versus demand.
The 10 non-OPEC producers that are part of the supply cut pact also cut production by 270,000 barrels per day in August from July, and their output is now 640,000 barrels per day their pledged level.
Major oil producers agreed to cut crude oil production by 1.8 MMbpd from January 2017 to March 2018.
The global surplus of crude and stocks over the five-year average fell to 190 million barrels. A quarter of USA refining capacity to be taken off-line due to the hurricane, sapping demand. Refinery output continued to fall in the wake of Hurricane Harvey, causing gasoline stocks and distillate inventories to drop as well.
The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning, showing that U.S. commercial crude inventories increased by 5.9 million barrels last week, maintaining a total U.S. commercial crude inventory of 468.2 million barrels.
Aside from total USA crude stockpiles, oil centered in the Cushing, Oklahoma hub, which stores supply meant for delivery against WTI contracts, has abeen rising.
According to OPEC, world demand growth could increase enough to handle the increases in production that will take place next year between the USA and OPEC.
Oil in NY has closed below $50 a barrel since July as efforts to drain a global glut by the Organization of Petroleum Exporting Countries and partners including Russian Federation confront rising shale output. While Gulf Coast crude imports fell to the lowest in records going back to 1990 after Harvey, refineries, pipelines and offshore platforms are resuming operations. OPEC NGLs and non-conventional liquids production are seen averaging 6.49 mb/d in 2018, representing an increase of 0.18 mb/d, broadly in line with growth in the current year. Gasoline prices in the United States have already corrected sharply after touching a two-year high earlier this month.