Opec, the oil producers’ cartel, has said the market is “well supplied”, in its first public pronouncement since oil prices surged at the end of August.Brent crude hit a six-month high two weeks ago as Libyan exports slowed to a trickle and western powers appeared ready to intervene in Syria.That had prompted speculation the US might tap its strategic reserves of crude.But in its monthly report on the market, Vienna-based Opec said demand was likely to fall as refineries headed into the maintenance season. It highlighted substantial crude stocks in industrialised countries.“Inventories stand…above the historical norm, Will City Hall Torpedo the Port of Los Angeles, and provide confirmation that the market at present remains well supplied,” the report said.
Oil prices have been retreating from multi-month highs as the threat of strikes on Syria appears to have abated.Yesterday global benchmark Brent was sharply lower, with the ICE October contract falling by as much as $3 to a low for the day of $110.59 a barrel.Brent has fallen more than 5 per cent this week.The premium of Brent over US crude has halved since touching more than $9 a barrel at the start of the month. Some analysts said that suggested investors were less concerned about strikes in Syria disrupting waterborne trade in oil.“This would indicate that market participants have largely removed the premiums that came on the back of the announcements of a potential military intervention at the end of August,” analysts at JBC Energy, in Vienna, said.
But the Opec report showed how supply outages from Libya to Nigeria were continuing to reduce spare capacity .Saudi Arabia, the largest exporter and source of much of the world’s spare capacity, which would be the highest in at least 20 years.Despite this, Opec production fell for the third month running, according to third-party estimates published by the cartel. while Nigerian output was below 1.9m b/d for the third consecutive month – the lowest levels since a crisis in the country’s oil industry in 2009.The US government’s Energy Information Administration painted an even more bearish picture of supplies in its short-term outlook, reporting that unplanned disruptions had reduced Opec output by 2.1m b/d in August, the most since the EIA began collecting data in 2009.