With oil prices now sitting at their lowest levels in nearly seven years, OPEC could be forced into emergency action in the coming weeks to help stabilise the market. The rebound for crude-oil prices comes despite concerns that a climate deal in Paris may hurt long-term oil demand. He said it is prepared for the “worst scenario” for oil prices. US oil prices have traded below the global benchmark for several years because USA crude supplies are high and producers have had to discount their crude to attract buyers.
Advertisement
Falling from roughly US$115 a barrel back then to less than US$40 a barrel today, OPEC… WTI crude oil is trading at 36.36 and Brent oil is at 38.15 with the spread now closer than $2 its narrowest gap this year.
With emerging markets slowing down and the pace of economic growth in China expected to shrink again next year, combined with the fact that OPEC is reluctant to restrict supply, it is looking likely that oil will continue its downward spiral, with some oil producers preparing for prices to fall below £20 a barrel.
West Texas Intermediate (WTI) for January delivery lost as much as 17 cents to US$36.14 a barrel on the New York Mercantile Exchange and was at US$36.17 at 7.21am in Hong Kong.
Iran needs $250 billion of investment in its oil industry between 2016 and 2025, including $176 billion in its upstream sector and another $77 billion in downstream spending, Kardor said then. This report also showed lower refinery inputs, meaning lower demand for crude oil. The rating agency also revised lower its 2016, 2017 and 2018 assumptions for Henry Hub natural gas prices by $0.50 per million British thermal units (MMBtu) each to to $2.25, $2.50 and $2.75 respectively.
“While it is often said that a boom nourishes a boom, it might be more apt to turn this around and say that gloom is nourishing gloom on the oil market just now”, analysts at Commerzbank said in a note. The Organization of the Petroleum Exporting Countries, whose 13 member nations produce about 35 percent of the world oil supply, has effectively abandoned oil production quotas, adding to the world oil glut.
Advertisement
Opec is determined to keep pumping oil vigorously despite the financial strain even on the policy’s chief architect, Saudi Arabia, alarming weaker members of the cartel who fear prices may slump towards US$20 a barrel. “Iran may return to the market in January which is causing concern of increasing oversupply”, said Berentsen.
