Oil prices fell to their lowest value in six years on Tuesday, as China rapidly devalued the yuan and increased production from the Organization of the Petroleum Exporting Countries (OPEC) continued to drive down demand and raise supply.
At the same time, the U.S. Energy Information Administration issued a prediction for lower oil prices for the year.
Non-OPEC supplies will shrink by 200,000 barrels a day in 2016 to 57.9 million a day, with the U.S. the “hardest hit” among those producers, which also include Canada, Brazil and Russian Federation, the IEA forecast.
The IEA said global oil demand growth in 2015 would be the strongest in five years, although it added that global oversupply would last through 2016.
In related news, EIA lowers 2015, 2016 U.S. crude oil production forecasts.
This is going to be a big advantage for vehicle owners, drivers, shippers and airlines that enjoy the lower fuel prices due to the fall on the crude oil’s price while the oil industry is getting lower profits forcing them to cut down on expenditures and employment.
OPEC raised output by 100,700 barrels a day to 31.5 million in July amid a recovery in Iranian supply, the group said in its monthly market report this week, citing external sources.
Elsewhere, crude oil for delivery in September on the New York Mercantile Exchange tacked on 20 cents, or 0.45%, to trade at 43.50 a barrel. Gasoline inventories decreased by 1.3 million barrels last week, but are in the middle of the average range.
China is the world’s biggest oil consumer after the US and a weaker yuan erodes Chinese purchasing power for dollar-denominated imports, potentially reducing demand.
Losses deepened on Thursday after market intelligence firm Genscape reported that stockpiles at the Cushing, Oklahoma delivery point for U.S. crude futures rose more than 1.3 million barrels in the week to August 11, adding to concern that the Whiting outage was pushing up the surplus in crude.
“The emerging trend shows a clear link between sharply lower prices, accelerating oil demand growth and recuperating economic conditions”, according to the latest report.
