Crude oil futures stable as IEA points to finely balanced supply; ICE Brent down to $75.86/b, NYMEX WTI $66.23/b

London (Platts)--13 Jun 2018 731 am EDT/1131 GMT

Crude futures mostly pared the morning's losses in European trading Wednesday, as predictions from the International Energy Agency that output would need to rise to offset declines from Venezuela and Iran weighed out against bearish stock gains in the US.

Related article -- Extra crude oil production needed to fill Iran, Venezuela gap: IEA

At 1040 GMT, the August ICE Brent crude futures contract was down 2 cents/b from Tuesday's settle at $75.86/b, after strengthening from earlier in the morning, while the NYMEX July sweet light crude contract was down 13 cents at $66.23/b. The US dollar index was down 0.06%.

On Wednesday, the IEA said in its monthly report that global crude markets were "finely balanced" and vulnerable to disruption, which would ultimately require more output from swing producers, even as the agency forecast that non-OPEC output would grow this year.

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Free-falling output from Venezuela, which is in the midst of economic crisis, paired with the reinstatement of Iranian sanctions by the US "would require higher production from those producers with spare capacity," in the group of OPEC and non-OPEC producers privy to the production cuts, the IEA said.

However, the IEA also raised its estimate of non-OPEC oil output growth to 2 million b/d, up from 1.9 million b/d, on the back of rising US production.

Those forecasts come on the tail of monthly reports released on Tuesday by OPEC and the US Energy Information Administration, which forecast a mixed picture of rising demand and rising US oil output.

In its report, OPEC forecast that demand for its crude would rise to 33.34 million b/d in the second half of this year, up from 32.15 million b/d in the first half, which could support the case for increasing production, as both Saudi Arabia and Russia have signaled. Other members of the bloc, however, have signaled they would be unwilling to increase output in the near term.

"The bulk of other OPEC members do not have much in the way of spare capacity, and so would be worse off if the likes of Russia and Saudi Arabia increase output," ING analysts said in a morning note.

The EIA forecast US crude production will average 10.79 million b/d in 2018, a 700,000 b/d increase from their previous forecast.

The tension between sinking production amid the members of the output cut agreement, even as US shale output continues to rise, are expected to be the focus at the next OPEC meeting in Vienna on June 22.

US crude inventories rose by 883,000 barrels in the week ended June 8, and gasoline and distillate stockpiles also saw gains, with gasoline stocks rising 2.33 million barrels and distillate stocks rising 2.10 barrels.

Both far exceeded expectations of analysts surveyed by S&P Global Platts. They forecast that crude stocks would fall by 2.6 million barrels and gasoline stocks would increase by just 200,000 barrels.

On Wednesday, the market will be looking ahead to the more definitive weekly figures released by the US Energy Information Administration.

--Katherine Dunn,
--Nick Coleman,
--Edited by Jonathan Fox,

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