The global oil surplus is beginning to shrink due to stronger-than-expected European and US demand growth, as well as production declines in OPEC and non-OPEC countries, the International Energy Agency said on Wednesday.
Kazakhstan exceeded the plan thrice, cutting production in August by 54 thousand barrels per day with a quota of 20 thousand.
In a monthly report, the Organisation of the Petroleum Exporting Countries (Opec) said the world would need 32.83 million barrels per day (bpd) of Opec crude next year, up 410,000 bpd from its previous forecast. The goal of the deal, which was extended in May, was meant to drain a global oversupply that has kept prices depressed amid a resurgence in USA shale production.
Among persistent glut worries, Saudi Arabian Energy Minister Khalid al-Falih had discussions with his Venezuelan and Kazakh counterparts about the chances of extending supply cuts through March 2018. After the markets closed on Tuesday, the American Petroleum Institute reported that United States oil inventories rose by almost 6.2 million barrels in the week ended September 8.
Production had been on the rise over the summer, raising concerns OPEC's deal to cut output wasn't working.
"On the one hand, the smaller-than-anticipated crude [supply] build, coupled with large draws to product stocks should provide support to crude prices, but continued weakness in refinery demand and rebounding production could serve to overshadow this signal", Troy Vincent, oil analyst at ClipperData, told MarketWatch. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.3 million barrels, API said. Saudi output was trending higher in recent months. 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.
Two of those nations, Iraq and the United Arab Emirates, cut production in August but were still pumping above levels they agreed to last winter.
It fell in Libya, also exempt, and in Venezuela as both countries struggle with political trouble.
It has expected the USA economic growth to stay unaffected due to Hurricane Harvey, considering the offset of economic activity loss caused by the reconstruction work along the Gulf Coast. World Oil Supply Non-OPEC oil supply is expected to grow by 0.78 mb/d in 2017, unchanged from the last month due to offsetting revisions in Kazakhstan and U.S. supply.