“There are a few very good analysts that I respect that have called for oil prices to bottom in the high $20s”.
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Internationally traded Brent crude futures were at $44.10 a barrel, up four cents on their last settlement, but close to August lows. Inventories now stand at their highest for this time of year since 2010.
Russian Federation has reached record output, partly offsetting an overall decline in production from other non-OPEC countries, especially the US. The STEO forecast projected lower crude prices for 2016, which raised concerns about future demand growth for crude oil, which in turn led to oil prices go below two-month lows.
“The weakness of global manufacturing activity is… putting pressure on energy demand”, JBC Energy said, adding that it expected a significant drop in oil demand growth in 2016.
The IEA did not see the situation changing anytime soon.
This “massive cushion has inflated” on record supplies from Iraq, Russian Federation and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. OPEC has always intervened when the oil prices have slowed down.
Global Energy Agency executive director Fatih Birol told the FT that weak demand coupled with oversupply would keep oil prices under $80 per barrel until 2020.
The EIA data came on the heels of an OPEC report that suggested the producer group could have a daily supply surplus of more than half a million barrels by 2016 if it continued pumping at current rates.
Iraq, the second largest oil producer in the Organization of Petroleum Exporting Countries, has increased its market share in Europe after the imposition of sanctions on Tehran resulted in the collapse of Iranian exports, the IEA said. While it has peaked in April at 9.6 million barrels a day, production in the United States has recently stabilized.
Crude oil is extending a decline that worsened after data from the Energy Information Administration (EIA) on Thursday showed that U.S. inventories rose for a seventh straight period last week.
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The OPEC estimated that non-OPEC oil supply to average 57.24 mb/d in 2015, an increase of 0.72 mb/d. OPEC’s report comes before the group meets in Vienna on December 4 to discuss production policy and strategy.
