Crude rallied early after Saudi Arabia pledged to work towards oil price stability.
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He said markets were waiting for the OPEC meeting to see if the cartel “really means business” and starts trimming production.
“For the most part the strategy the Saudis are following is working, in that American shale players are under great distress”, said Dan Dicker, TheStreet energy contributor and author of Shale Boom, Shale Bust: The Myth of Saudi America. When asked how low oil prices could go in 2016 if OPEC doesn’t change its policy, he said: “Mid-20s”. “Rhetoric is one thing, action is something else”.
“We can not allow that the market continue controlling the price”, del Pino told journalists at the Gas Exporting Countries Forum in Tehran, according to Bloomberg. Angola, another member of the Organization of Petroleum Exporting Countries, also surpassed Russian Federation in shipping crude to the Asian nation.
January Brent futures were down 23 cents to just over $44.43 per barrel.
As well as concerns about demand-supply mismatch, oil prices remain pressured by the rise in US dollar (.DXY) in which oil is usually quoted which hit seven-month highs on Monday.
On the New York Mercantile Exchange, West Texas Intermediate futures were trading down $1.30, or 3%, at $40.60 a barrel.
Brent for January settlement slipped 14 cents, or 0.3 percent, to $44.52 a barrel on the London-based ICE Futures Europe exchange.
Saudi’s cabinet said yesterday it was ready to cooperate with OPEC and non-OPEC countries to achieve market stability, days before OPEC meets to review its year-long policy of not supporting prices.
Earlier in the session, a broader commodities sell-off led by copper and the firmer dollar had weighed on oil.
In nearly all of its investor presentations this year, EOG has said it can turn a profit at prices at or below the prevailing oil price at the time of the presentation.
The Saudi remarks came as oil prices barely held above 2-1/2-month lows, and were greeted with a mix of enthusiasm and skepticism.
With the future direction of oil prices notoriously hard to predict, how does del Pino’s forecast fit in with those of other industry insiders?
“Prices will struggle to recover, with lacklustre demand lagging global supply”.
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Going forward, the global oil market “will face chronic surpluses well into the second half of 2016”, TD said.
