Including output from the semi-autonomous northern Kurdistan region, Iraq’s output has risen about 700,000 b/d since this time past year to more than 4m b/d.
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Oil prices have plunged by more than half from peaks of over $100 a barrel in mid-2014.
“U.S. crude inventories breaking to a new high and production inching upwards should have been the reason for the market shakedown”, Singapore-based Phillip Futures said, referring to a 4.2 million barrel crude inventory rise by last week against a market expectation for a 1.3 million barrel gain.
Producers in the US added two oil-drilling rigs this week, demonstrating that a few companies can continue investing in new output even with prices near six-year lows.
Global oil demand growth has not been fast enough to soak up the excess in supplies and analysts say a rebalancing of the supply-demand situation is needed for a sustained uptick in prices. Palladium fell 3.0 per cent to its lowest since late-August at $US555.25 an ounce and platinum extended losses to $US868.75, a near seven-year low.
“It has also provided a challenging market environment for a few higher-cost crude oil production, which has already shown a slowdown”. Another factor was a strengthening dollar, which encouraged producers outside the U.S.to ramp up commodity sales, while concerns rose about global demand.
“The more shale oil they produce, the more heavy crude they need to blend with that”, he said. In its monthly oil market report, the agency said that increasing inventories of crude and oil products worldwide may worsen the overhang into 2016.
The IEA said global oil-demand growth will slow to 1.2 million barrels a day in 2016, after surging to 1.8 million barrels a day this year, a five-year high.
The supply surplus is 710,000 barrels per day lower than it was in the 2nd quarter of 2015 but is higher than any other quarter since the oil-price collapse began.
OPEC is trying to convince the world that demand will be better next year and beyond, but right now the world is facing a “heck of a glut”, and that glut will persist a long time at present over-production level.
For more information on the crude oil market, visit our oil category. “Europe is awash with competing sour crudes from the FSU and Middle East and U.S. sour crudes remained depressed by refinery maintenance”, the IEA said.
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Analysts are mostly downbeat about the outlook for oil prices, given ongoing worries about a glut of crude supplies.
