Oil prices dipped early on Thursday as producer club OPEC said it expected demand for its crude to decline next year as rivals pump more, pointing to a market surplus in 2018 despite efforts to tighten the market. Brent crude futures were at $47.64 per barrel at 0133 GMT, down 10 cents, or 0.2 percent, from their last close. West Texas Intermediate (WTI) crude futures were at $45.37 per barrel, down 12 cents, or 0.3 percent. The Organization of the Petroleum Exporting Countries (OPEC) said late on Wednesday that the world would need 32.20 million barrels per day (bpd) of crude from its members next year, down 60,000 bpd from this year, as consumers have increasing choice of supplies from outside OPEC.
Meanwhile, OPEC said its output rose by 393,000 bpd in June to 32.611 million bpd. The gain was led by Nigeria and Libya. This came despite a pledge by OPEC to curb output by about 1.2 million bpd between January this year and March 2018, while Russia and other non-OPEC producers say they will hold back half as much. Despite the ongoing supply overhang, there are signs of a gradual reduction of the glut. In the United States, crude oil inventories last week dropped the most in 10 months. Crude inventories fell 7.6 million barrels in the week to July 7, to 495.35 million barrels. The decline was the biggest since the week ended Sept. 4.
While U.S. crude inventories remain far above their five-year average, stocks have fallen 7 percent since record levels from late March. “U.S. inventory numbers confirmed that a drawdown (of excess inventories) was in train,” ANZ bank said.