Between 2011 to 2014, when oil prices ranged between $57.33 to $126.65 a barrel, OPEC producers enjoyed a cost advantage of $10 to $40 per barrel over listed "Big Oil" firms, according to Goldman's analysis.
A similarly-minded Bob Dudley, chief executive officer of BP, reiterated the familiar criticism that markets must stop taking into account data on a weekly basis, and that the harsh reality is inventory levels globally "are so high", discouraging him from any position other than crude prices remaining more or less where they are now.
This has diluted Opec's production cuts by almost two-thirds, which the IEA noted: "must be very frustrating especially as their pact has, hitherto, been well observed by historical standards". According to the latest estimates, compliance declined to 78% for June from 95% in May.
Increased production from Nigeria and Libya, combined with faltering compliance with the agreed-upon production cuts, are raising serious questions about whether the market can achieve balance this year.
Oil prices were slightly lower on Thursday after the Organization of Petroleum Exporting Countries (OPEC) estimated a decline in demand for crude next year as rivals produce more, indicating a market surplus to occur in 2018 despite efforts to cut output.
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Gasoline stocks also fell more than expected.
Image: IEA highlighted a stronger outlook for global oil demand in its monthly report. The IEA also forecast a rise in oil demand this year: it may grow by an average 1.3 million bpd, accelerating from the 900,000 bpd in the first quarter. But at 495.4 million barrels, US crude oil inventories were in the upper half of the average range for this time of year.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August CLQ7, -0.04% recently traded down a penny at $45.48 a barrel in the Globex electronic session. Of later, there have also been increasing cries to impose an output cap on Nigeria and Libya.
USA crude oil production patterns in the Lower 48 onshore basins continue to vary by region, and quickly evolving trends in this sector can affect both current prices and expectations for future prices. The gain was led by Nigeria and Libya. "For fellow OPEC members, who agreed to reduce production by 1.2 million barrels per day, to see their cut effectively diluted by almost two-thirds must be very frustrating, especially as their pact has, hitherto, been well observed by historical standards", said the IEA analysts. Prices fell after EIA reported builds in total USA crude oil and petroleum products inventories that were above the five-year average during the weeks ending June 2 and June 9. Production from those two countries, in particular, has surged in recent months, undermining the attempted cutbacks and helping to derail widespread predictions of a rally.
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