While the group’s strategy has affected other producers, triggering the steepest fall in non-Opec supply since 1992, world oil inventories will probably swell further once Iran restores exports, predicted the Paris- based energy adviser to developed economies. “About 85 per cent of our total oil imports and 95 per cent of gas imports come from OPEC nations”.
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Oil prices won’t be affected by USA crude exports, according to OPEC’s top official. In early Tuesday trading, WTI was trading at $36.22/Bbl and Brent crude at $37.75/Bbl.
Prices on Monday fell below US$35 (S$49.30) for the first time since 2009 on remarks from an Iranian oil official who said there was “absolutely no chance” his country would delay its plan to boost shipments, even as prices slip.
The oil market has defied every attempt to fix or predict prices in terms of oil’s value to customers, the marginal cost of production, or the price of available substitutes.
A growing number of traders are, nonetheless, positioning themselves for notably higher prices a year from now through the purchase of bullish call options. “And it will be vice-versa”.
Oil producers and consumers must adapt to prices as they find them. India also needs a good price. “So what we are looking at is a fair price”, he said.
But it added that increases in Opec production had negated growing demand, leading to a rapid build up of oil stocks and that the trend would continue next year with only a limited pick-up in prices later. “This (low oil price) will not continue. In a year or so, you will see this will change”, OPEC Secretary General Abdullah al-Badri told a media gathering here after a meeting with Indian oil minister Dharmendra Pradhan. Oil slumped last week to levels last seen during the global financial crisis, while speculators increased bets on falling U.S. crude prices to an all-time high after the Organisation of Petroleum Exporting Countries (Opec) this month effectively abandoned production limits.
Evans-Pritchard also said that (emphasis my own): “Everything points to low oil prices next year, and it’s possible that it could be $US30 a barrel, and maybe less”. “If there is no more supplies, there will be less supply to the market”.
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Traders said that the low prices were a combination of structural oversupply and seasonal price weakness. In the US, Senate negotiators are nearing a deal to allow unfettered crude oil exports for the first time in 40 years, though differences remain on renewable-energy tax credits that Democrats are demanding in return, according to people close to the discussions. “For OPEC, we still can produce with the current price”, he said.
