Sept. 12 (UPI) — Crude oil prices posted slight gains early Tuesday after OPEC raised its expectations for demand growth, though a Kuwaiti bank warned against over-excitement.
Economists at the Organization of Petroleum Exporting Countries said in their monthly market report for September that total commercial oil stocks for members of the Organization for Economic Cooperation and Development was 195 million barrels above the five-year average and 123 million barrels above the seasonal norm.
OPEC is working to drain the five-year surplus through coordinated production declines and economists at the group said Tuesday that its demand forecast for the year was up 50,000 barrels per day to 1.42 million bpd, reflecting OECD growth as well as China. Demand growth next year is driven in large part by expansion in the European and Chinese economies.
Total OPEC oil production, meanwhile, was down for the first time since March.
The price for Brent crude oil was up 0.46 percent at 9:18 a.m. EDT to $54.13 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, took an erratic turn in early trading to lose 0.12 percent from the previous close to $48.01 per barrel.
Markets will be influenced later in the day when the U.S. Energy Information Administration releases its short-term market report, which includes forecasts for crude oil prices. EIA inventory data, meanwhile, is likely to show a huge build in crude oil stockpiles as U.S. refinery outages from Hurricane Harvey leave oil locked in storage.
According to an S&P Global Platts preview, EIA data could show a build of 10.1 million barrels for crude oil, but a drain on gasoline stocks of 4 million barrels.
Geoffrey Craig, the oil futures editor for Platts, said markets will be tested by what could be a steady buildup in U.S. crude oil inventories.
“Another bearish element is the potential for some refiners to go straight into autumn maintenance rather than restart for a brief period before shutting again to perform planned repairs,” he said in a report emailed to UPI.
Elsewhere, a report published Tuesday by the National Bank of Kuwait said geopolitical tensions, notably of North Korea, and the decline in the value of the U.S. dollar was propping up the price of oil. But the rally remains limited, it added, because of higher storage levels and a shale oil sector that’s proven to be more resilient to the weak energy market than expected.