Growth in United States shale oil supplies will stagnate to the middle of 2016 while output declines in Russian Federation, the Paris-based adviser said in its first detailed assessment of the year ahead.
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China is the largest Crude Oil importer in the world, and has massive influence over prices.
“Crude oil prices registered a slight gain…” Further, not all oil companies will be able to boost production like Pioneer Natural Resources can as many will struggle just to maintain it. All that to say, the short-term outlook is very murky. The country’s oil production reached an all time high last month of 4.1 million barrels per day.
Russian Federation and Brazil are adding to the world oil-market surplus with an “odds-defying, record-breaking surge in output, the report said”.
“The oil market was massively oversupplied in the second quarter of 2015, and remains so today”. It is equally clear that the market’s ability to absorb that oversupply is unlikely to last.
The drastic slide on Brent crude was one of the stories of 2014 and continued to run deep into 2015, but a report from the worldwide Energy Agency (IEA) suggests oil prices may yet fall further.
In trading Friday, U.S. benchmark West Texas Intermediate for delivery In August climbed 42 cents to $53.20 a barrel compared with Thursday’s close. The renewed sell-off comes a year after the oil market started its descent from above the $100 a barrel level it had averaged for most of this decade.
Corresponding with the oil price tumble, data from the Commodity Futures Trading Commission (CFTC) showed money managers’ net long position in USA crude futures and options fell by almost 20 percent in the week to Tuesday, the biggest weekly decline since December 2012.
“With ever-increasing measures to curb greenhouse gasses emissions and increase efficiency, we forecast OECD (oil products) demand to resume its downward trend from 2017 onwards”, the IEA report said.
The rebound in Brent prices from a six-year low of $45 a barrel in January to $69 in early May was stoked, in part, by near-record hedge fund buying as speculators bet low oil prices would quickly crimp supplies.
He adds, “oil sands growth has propelled Canadian production higher, and Canada now produces more oil, conventional, unconventional and oil sands combined, than every member of OPEC except Saudi Arabia”. The IEA says high profitability for the world’s oil refineries is likely to come to an end.
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In a June note, Morgan Stanley’s Adam Longson noted that even with peak summer demand, there weren’t enough buyers for all the crude oil out there.
