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Oil prices were kept close to 50 dollars mostly because of supply reductions, caused by attacks against Nigerian production and forest fires in Canada. However, after the United Kingdom referendum to leave the European Union, less economic growth is expected to reduce oil demand. According to the last monthly report from the Organization of Petroleum Exporting Countries (OPEC), released in Vienna two weeks ago, European oil demand this year is expected to reach 13.4 million barrels per day, almost the same level of 13.71 million barrels per day of 2015.
Additionally, there is uncertainty about inventory levels, given an increase in the number of supertankers used as temporary storage, by trading companies which do not have to declare the amounts stored. For instance, according to Thomson Reuters, quoted in The Wall Street Journal (July 25, 2016), at the start of this month there were 23 supertankers anchored around Singapore, holding 43 million barrels of oil, an increase from 15 vessels anchored at the start of this year.
This year, OPEC projects an increase in its members’ production to 31.9 million barrels per day and 33 million barrels per day in 2017. Also, it expects demand increases, from last year, by 5.6% in India and 2.5% in China, 1.7% in the Middle East, 1.1% in the Americas and almost 0.2% in Europe.
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