Chinese demand has been a bright spot for the glutted oil market, and concerns about a slowdown in the No. 2 oil-consuming nation have been a factor weighing on prices this year.
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“Against the background of additional volumes of oil from Iran, oil prices are expected to remain low for a longer period than it was expected previously”, he added. “I don’t think it will reach $60”. If it keeps falling, oil will take out the crisis low of $32.40 a barrel that was set in December 2008 and fall to the levels unseen since April 2004.
“You can not be optimistic in such market conditions, keeping in mind that today Brent is below $39 a barrel”, said a second OPEC delegate, from a non-Gulf member.
Oil’s rebound was restrained somewhat by a firm dollar ahead of expectations that the Federal Reserve on Wednesday will announce the first rate hike in nearly a decade. “Also where we can invest, investment to have more supplies to the consumers”.
While there are signs that this strategy is working, and US oil companies have cut back on production (which should lead to higher oil prices), but oil has yet to enjoy the rally that it would have enjoyed had OPEC chose to step in and taper its production.
In the United States, now the world’s biggest oil producer, congressional leaders inched closer on Monday toward agreeing to repeal a 40-year old US oil export ban. “2017 is more promising to give some support to the market”.
By contrast, the lifting of the USA export ban – which may go to a Congress vote as soon as Thursday – won’t have a “major volumetric impact” for the time being as US production has declined, Fyfe said. “When will they be able to pump more”, this source said, adding that he sees prices rising to the range of $50s a barrel by 2017.
OPEC supply is likely to increase by 1 million barrels per day next year, Morgan Stanley said in a research note.
Moody’s Investors Service has significantly slashed its price forecast for Brent crude and West Texas Intermediate crude as continued high levels of output by global oil producers have largely surpassed the growth in oil consumption.
“Gloom is nourishing gloom on the oil market”, said Carsten Fritsch at Commerzbank.
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The International Energy Agency, the leading energy forecaster, said oil stockpiles are expected to swell throughout next year, albeit at a slower pace than in 2015.
