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‘Freewheeling’ OPEC Policy Is Working: IEA
Despite an expected fall in US production next year, BMI Research said on Thursday that global output was forecast to rise by 500,000 barrels per day in 2016.
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US crude futures were down 45 cents at $36.71 per barrel, having touched a low of $36.52, a trough since February 2009.
Brent crude oil lost 1 percent in early Friday trading in response to the IEA report to open the day at $39.25 per barrel.
Elsewhere in the report, OPEC downsized its non-OPEC 2016 output estimates to an average of 57.14 million bpd, due to declining US shale-oil production: “This downward trend should accelerate in coming months, given various factors, mainly low oil prices and lower drilling activities”.
“OPEC’s output in November indicates that the global supply glut is exacerbating”, Will Yun, a commodities analyst at Hyundai Futures Corp in Seoul, said by phone.
Opec also hiked its oil demand growth forecast for the current year by 30,000 bpd to 1.53m bpd and left its 2016 growth forecast unchanged at 1.25m bpd. Demand growth peaked at 2.2 million barrels a day in the third quarter, but there are preliminary signs that it has eased to 1.3 million barrels a day.
Prices are falling for a sixth day, the longest losing streak in nearly nine months, since the Organization of Petroleum Exporting Countries chose not to curb output at its December 4 meeting.
US spot natural gas prices have fallen below $2 per million British thermal units for the first time on record this week and prices are down 46 percent this year, down by half since mid-2014 when the oil rout began, and 84 percent lower than their 2008 peak.
In a market commentary on Thursday, BMI Research said it expects prices to remain range-bound as the oil glut “persists to 2018”. However, as extra Iranian oil hits the market, inventories are expected to swell by 300 million barrels.
Oil prices are down more than 10% over the week.
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OPEC, looking to maintain market share in the face of fierce competition from top non-OPEC producers such as Russian Federation and the United States, did not set a new production ceiling at Friday’s meeting in Vienna.