West Texas Intermediate for December delivery lost as much as 43 U.S. cents to US$46.16 a barrel on the New York Mercantile Exchange and was at US$46.36 at 2.32pm Singapore time. “News from Iran is also painting a negative picture”.
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The greenback’s volatility also fed into oil prices, with the United States dollar index steadily sliding through the first half of the month and recovering in the second half, as expectations of a December Fed rate hike gained ground.
Oil prices are little changed as traders’ worries about abundant global supplies returns to the fore a day after a rally fuelled by bargain hunting from prior slumps.
US crude oil stockpiles likely rose by 2.7 million barrels last week, growing for a sixth consecutive week as supply outstrips demand, a media poll showed. However, it took 15 years for oil prices to rise after the collapse of 1985. Today we stand to say that next year will be another bad one for the oil prices, but we should not be that pessimistic. Oil is the main export of Venezuela and provides most of the country’s foreign currency.
But the lessons from the past suggest that cutting production to bolster oil prices would merely extend Saudi Arabia’s pain, as the country would cede market share to non-OPEC producers.
“Likewise, industrial-led diesel demand growth is ebbing as consumer-led gasoline growth stays strong …”
Opec members are said to be fearful that production cuts from non-members will not be on the table, or there will be little enforcement if a deal is struck.
In the USA, the oil rig count dropped to its lowest since June 2010, data showed on Friday, adding to speculation that domestic crude production will fall in the coming months, potentially providing a few respite for oil prices. Last September’s situation when the oil price has started to decline rapidly once more, reflected that neither OPEC nor anyone else can stabilize the prices as they wish.
“We are witnessing a market cycle similar to what we witnessed in the mid-1980s and there are real economic reasons why”. Still, oil prices remain below the US$50 per barrel mark.
Taking the brunt of OPEC’s price war against American shale-oil production are companies operating in communities like Hobbs (N.M.), and in Hobbs’ case, most are independently owned small businesses, and many are minority-owned. On average, WTI prices are expected to remain $4 per barrel below Brent prices in 2015 and $5 per barrel below Brent prices in 2016.
“Iran planning to add output by 500,000 barrels a day has been widely expected but the important matter is how fast it can raise production after the sanctions are lifted”.
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Crude oil prices are moving steadily lower, off about 11 percent for the year, because of signs of lingering global economic weakness and a surplus in supplies.
