Oil futures settled sharply lower Monday, reversing a portion of last week’s sharp rebound after data showed the Organization of the Petroleum Exporting Countries further increased output in September.
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OPEC also said it expects USA production to fall on an annual basis next year for the first time in eight years, increasing demand for OPEC crude to 30.8 million barrels a day.
The surge in OPEC production last month coincides with forecasts of stronger demand over the next year.
The running of the bullsGiven this outlook, OPEC members are starting to become more bullish on oil prices heading into next year.
“This situation may not stay long, more than two years”, he said in response to a question on how long the market would take to rebalance.
Oil prices rose on Monday as the number of US rigs fell for a sixth straight week, while investors waited for Chinese trade data to be published later this week for clues on demand at the world’s top energy consumer.
The market remains oversupplied and stocks are above their 5-year average, El-Badri said.
In addition to falling oil supplies in the U.S, OPEC sees supply sinking in most other non-OPEC countries.
On the precious metals front, COMEX gold futures contract was up 0.58% or $6.70 at $1,162.60 an ounce, while spot gold was 0.78% or $9.03 higher at $1,165.56 an ounce.
In its report, OPEC pointed to a supply glut easing in 2016 and to a “more balanced” market. “There is one problem we are facing: the overhang of 200 million barrels”. “Though we perceive a sentiment shift, the physical indicators are not yet convincing, and a repeat of Q2 where a swift price rally slowed the balancing process risks happening again”.
The crude complex is trying to find a steady footing after last week’s push higher, with supportive comments out of OPEC members Kuwait and Qatar.
The oil industry’s “best days are yet to come”, as demand will grow to 110 million barrels a day by 2040, El-Badri said at the conference on Sunday.
He explained that overall global investment in oil could drop by $130 billion this year from $650 billion in 2014.
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Badri said he expected Iran’s full return to the market to be discussed at OPECs next meeting on December 4, in Vienna, Austria.
