Oil prices sink after International Energy Agency's outlook

Oil prices sink after International Energy Agency's outlook

Brent crude oil was down 62 cents at $56.32 a barrel by 1:43 p.m. ET.

EIA today reported a 2.8-million-barrel draw in USA crude oil inventories for the week to October 6, lifting market spirits further amid higher oil demand growth projections from OPEC and growing Middle East tensions around Kurdistan.

Yesterday the EIA said it expects USA crude oil production in 2018 to rise by more than previously expected. Distillate stockpiles, which include diesel and heating oil, fell by 1.5 million barrels, versus expectations for a 2.2-million-barrel decline, the EIA data showed. Though Brent and WTI futures were responding negatively to the crude stock-build reported by the API early Thursday, the market will be looking to the corresponding EIA data later in the day for validation. Distillate stocks fell by 1.5 million barrels, short of expectations for a drop of 2.2 million barrels.

For 2018, it forecast WTI $50.57-up 2% from the previous outlook.

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Crude prices gained in Asia on Friday with trade data from China supporting rising demand views as the market looks ahead to U.S data.

The International Energy Agency said on Thursday demand for OPEC oil would be 32.5 million bpd next year - around 150,000 bpd lower than the group pumped last month. This likely means OPEC must deepen its production cuts to finish its job of bringing oil stocks back to the five-year average.

USA commercial crude oil inventories decreased by 2.8 million barrels from the previous week, the EIA said. But traders say supplies remain ample despite these cuts, thanks in large part to surging US production.

The EIA also forecasts USA crude production averaging 9.9M bbl/day in 2018, which would mark the highest annual average production in US history. For 2018, oil demand is expected to rise by 420,000 bpd vs 400,000 bpd previously.

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