However, this time – most recently at a meeting in Vienna on Friday last week – it has opted to keep the taps open.
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“If the average price for oil remains at US$20 per barrel for 2016 and 2017, we are expecting the government’s petroleum-related revenue will fall from the current expected value of RM31.7 billion to RM22 billion in 2016 and fall further to RM9 billion in 2017”, he said.
The IEA said in a monthly report that growth in demand for oil will ease next year to 1.2 million barrels per day, from 1.8 million barrels a day this year.
They’re now convinced OPEC is not just looking to maim the production capabilities of non-OPEC players in Canada, Brazil, Mexico and here in the US, they’re looking to kill them dead.
OPEC’s report follows its acrimonious meeting on Dec 4, where it rolled over a policy of pumping crude without restraint.
The Organization of the Petroleum Exporting Countries last week failed to reach an agreement on production quotas, leading to fears that increased production from Iran and elsewhere would deepen the glut further. “As inventories continue to swell into 2016, there will still be a lot of oil weighing on the market”. Of the seven shale basins in the United States that contributed to almost all of the recent growth, only two – the Permian basin in Texas and the eastern Utica area – are expected to experience growth in January.
PIRA Energy, a closely-followed market consultancy, said crude would be under more pressure soon as onshore oil storage was likely to run out by the first quarter. November’s total output is nearly 900,000 barrels a day more than the estimated demand for OPEC crude next year.
Brent futures were 24 cents lower $39.87 per barrel at 1340 GMT, having traded as high as $40.70. The 786,000 barrels rise – compared to analysts’ projections for a 3.2 million barrels increase in supply level – took gasoline stockpiles up to 217.65 million barrels.
“There is evidence the Saudi-led strategy is starting to work”, the IEA said, referring to the producer group’s decision to maintain high output to safeguard market share.
On the New York Mercantile Exchange, WTI crude for January delivery fell 0.72% to $36.50 a barrel.
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The EIA also indicated that natural gas inventories hit a record high last month and that average prices would fall from $3.35 per million British thermal units last winter to $2.47 between October and March.
