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OIL DOWN ON U.S GLUT AND SAUDI OUTPUT

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OIL DOWN ON U.S GLUT AND SAUDI OUTPUT

Feb 19 2015, 2.25pm GMT

STOCK.com

U.S crude inventories rose by 14.3 million barrels; oil heads below $50 mark.

To be confirmed, a day late due to the U.S holiday, the inventories for American oil stocks are due to come in at 14.3 million barrels, well above expectations of 3.2 million barrels, and as CNBC reports ‘the biggest weekly addition in barrels since such data became available in 1982.’ Signs of a glut tend to send oil prices down.

Conversely, U.S rig counts are available every week, after which there is usually a rally, as on 13 February when the count was down 98 and oil rose nearly $2 on the day’s trading. Though the active rig count acts as a leading indicator of demand for products used in drilling, completing, producing and processing hydrocarbons, the figure also demonstrates the supply momentum of oil to the markets.

Meanwhile, in the Energy Outlook report released this week from BP, expectations of Middle East production are also affecting the markets. BP posted the following details on the Middle East, giving a mixed picture of global supply from the world’s largest oil producing region:

  • Middle East energy production is expected to rise 32% by 2035. Consumption grows by 69%, with 97% of demand still met by fossil fuels by the end of the Outlook period.
  • Middle East oil production is expected to expand by 19%, but demand rises by 48% between today and 2035, reducing the share of exported production.
  • The Middle East remains the world’s largest oil producing region; its share of global supply falls from 32% to 28% over the next few years, but returns to 32% by 2035.

BP also released the statement that, ‘We project North America becomes energy self-sufficient by 2015 and energy supply as a share of consumption reaches 119% by 2035.’

Considering the growth in the U.S economy, which is showing rising consumer demand for oil as people have more money to spend, in addition to the development of shale energy production, the BP forecast for North American oil production increasing by 48% implies a considerable shift in demand from the States.

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