But strength in the USA dollar, resilient US production and a continuing global supply glut are also among the key reasons why oil prices continue to fall, he said.
Advertisement
There are fears however that the drop could worsen in the coming months and into next year as OPEC is not likely to consider its output ceiling – which had been set at 30 million barrels a day – until next June. Crude oil crumbled below $37 a barrel on Tuesday for the first time since February 2009.
Crude inventories fell 3.6 million barrels in the week to December 4, compared with analysts’ expectations for an increase of 252,000 barrels, US Energy Information Administration (EIA) data showed.
“Oil markets have been dogged by oversupply, with an estimated 1.8 million bpd above demand being produced”, it said.
Oil has lost 39 percent in the past year as OPEC maintains output to defend market share against higher-cost producers amid a global glut. While the onus of the record production rates was placed on Iraq, Bidness Etc believes production rates would only continue increasing, with Iran’s trade sanctions expected to be lifted as soon as January next year.
Oil prices shed earlier session gains on Wednesday as traders disregarded the falling crude stockpiles.
The figures do not include Indonesia, which rejoined OPEC at last week’s meeting.
The EIA said distillate inventories jumped by 5 million barrels, double the forecast and the sharpest rise since January, while demand for the fuels fell to its lowest level seasonally since 1998, according to the data.
Production in Saudi Arabia slipped by 25,200 barrels a day to 10.13 million a day in November, OPEC’s report showed.
But Andrew Lipow, president of Lipow Oil Associates, said he was skeptical the drawdown was mostly from the tax avoidance, since the barrels are taxed on December 31, and it is early for the industry to be moving them.
Non-OPEC supply will fall by 380,000 barrels a day next year, averaging 57.14 million a day, with an expected contraction in the USA accounting for roughly half the drop, the organization said Thursday in its monthly report.
Advertisement
Lower crude oil prices are eating away at the pocketbooks of oil companies. On Thursday morning in New York, WTI fell 1% to as low as $36.55 per barrel.
