Competition will cut their oil production in 2016

USA crude futures were at $36.53 a barrel, down 23c and just above Thursday’s bottom of $36.38 – the benchmark’s lowest mark since February 2009.

Internationally traded Brent futures were at $40.35 a barrel, up 24 cents. The group’s production rose to a three-year high in November, it said in a report Thursday, as surging Iraqi volumes more than offset a slight pullback by Saudi Arabia.

A short-term market report from the U.S. Energy Information Administration said the full-year average for Brent should be $56 per barrel next year, about 5.6 percent above the expected average for 2015.

As per the Iran oil minister, Bijan Namdar Zanganeh, production will likely increase by 500,000 barrels a day within a week after the relaxation in sanctions and by 1 million barrels a day within a month.

“The market will continue to watch oil carefully and we can expect a mixed to positive session if we don’t see any wild swings in oil prices like we did yesterday”, said Peter Cardillo, chief market economist at First Standard Financial in NY.

Oil prices fell for a fourth day in a row on Wednesday after the market ignored an unexpected drawdown in US crude stockpiles to focus on a build in distillates, including diesel, that came in twice as large than expected. They reached a peak of $108 per barrel in June 2014.

Oil prices have risen following a fall in United States crude inventories, yet concerns remain about the global oversupply.

OPEC said last week some level of balance would return to the market during the latter half of 2016.

“As companies make further spending cuts in reaction to sub-$50/barrel oil, the impact on supplies – both from non-OPEC and OPEC – will be even more pronounced in the longer term”, the IEA said. With extra barrels coming from OPEC, the report points to a 860,000-bpd supply surplus in the market next year if the group keeps pumping at November’s rate, up from 560,000 bpd indicated in last month’s report.

Crude oil prices hit fresh seven-year lows on Friday as the International Energy Agency warned that global oversupply could worsen in the New Year.