In its last report, the IEA said this “massive cushion” of excess supply had grown with falling oil prices, which have reached a new normal of about $50 billion barrels a day.
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On the demand side, an economic slowdown in Asia, led by the region’s two biggest economies China and Japan, has led to concerns about slowing consumption, though it has so far held up. Producers in the US added two new oil-drilling rigs this week, oil-field-services firm Baker Hughes Inc. said Friday, demonstrating that a few companies can continue investing in new output even with prices near six-year lows.
Oil slumped again on Friday, extending the week’s loss to the largest in eight months, as swelling storage of crude on both land and sea pressured prices.
U.S. crude futures were 80 cents, or 1.9 per cent, lower at $42.13.
EIA estimates that total USA crude oil production declined by 40,000 barrels per day in October compared with September.
Oil prices have collapsed over the past 18 months, and have caused a wave of destruction to the economies of Canada, Russian Federation and Saudi Arabia, which have depended upon their oil reserves to stimulate their economies.
USA crude was 15 cents higher at $41.90 a barrel.
Oil is more than 60 percent down since mid 2014, with the market plagued by oversupply owing in particular to booming USA shale output.
Based on contracts traded during the five-day period ending November 5, the lower and upper limits of the 95% confidence interval for the market’s expectation of monthly average WTI prices are estimated at $35/b and $66/b for February 2016 widening to $28/b and $95/b for December 2016 (Figure 1).
On the Intercontinental Exchange (ICE), brent crude for January delivery wavered between $44.16 and $45.45 before closing at 44.39, down 0.78 or 1.73% on the session.
“Still, crude and refined products remain over-supplied in virtual glut conditions”.
Higher-cost producers in Canada and Brazil, as well as the United States, are likely to fall victim to low oil prices faster than most exporters, but these declines could be offset by supply growth in Iraq and Iran. Oil stockpiles in developed countries are at the highest since the financial crisis as global supply outpaced demand growth, the group said in a report.
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The oil market is also looking for any indicators from the Organization of the Petroleum Exporting Countries (OPEC) over its production policy.
