The EIA expects USA oil production to average 8.8 mb/d in 2016, a fall from the 9.3 mb/d average for this year. Output continues to go up, despite a slowing demand growth.
Advertisement
The steep decline in oil prices had in March forced the National Assembly to settle for $53 per barrel as the benchmark price for the 2015 budget, down from $65 proposed by the Executive. No matter that Opec member Venezuela, reliant on oil for more than 90pc of its export revenue and enduring a 9pc GDP contraction this year, is on the brink of civil war. Even Nigeria too disagreed to cut its crude oil production as to stand in the competition. Cost of production for the U.S. is relatively higher, and if oil remains at lower levels, production might just not be sustainable.
Gas tumbled below $2 per million British thermal units for only the second time in three years as forecasts showed above-normal temperatures that would suppress heating demand through late December. It increased output by 247,000 barrels per day in November, although some of that was gained because of an outage in October.
The IEA said in a monthly report that growth in demand for oil will ease next year to 1.2 million barrels per day, from 1.8 million barrels a day this year.
“The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter”, said Richard Gorry, director of consultancy JBC Energy Asia.
Brent and USA crude’s West Texas Intermediate (WTI) futures fell as much as 5 percent on the day and 12 percent on the week as mild pre-winter weather and a plummeting United States stock market added to the toll on oil prices. EQT Corporation, one of the largest shale oil producers in the country, has experienced a 30% drop in stock prices.
“I am pessimistic about that, because within OPEC itself, there is not a unified agreement on the need to cut”, Novak said, responding to a question on whether Russian Federation may agree with Saudi Arabia on organized limits to production.
“Storage levels may provide yet another check on reality”, the IEA said.
Since meeting last weekend, Opec has revealed that total production rose by 230,100 barrels a day in November from the month before, to 31.695m barrels – a four-year high and largely caused by increased production in Iraq.
“There is evidence the Saudi-led strategy is starting to work”, the agency said. Other producers provide the rest of the supply, which makes it impossible to produce oil at a price below 40. Producing oil at these low prices, in many cases, is not profitable.
January diesel futures fell 7.95 cents, or 6.5 per cent, to $US1.1456 a gallon, the lowest close since March 2009. “The back months have actually been hit a bit harder than the fronts as the report dispelled thoughts that a price recovery was on the not-too-distant horizon”. The market pared some losses on that.
Advertisement
“The market is strongly positioned for further price declines which is proven by the large number of short contracts in the market”, ABN Amro said on Friday.
