The story goes on to suggest that might set the stage for a rebound as lower prices have stimulated global demand, with Citigroup suggesting “Oil is the trade of the year”.
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The OPEC nations did not anticipate in their Thanksgiving attack that the USA government would lift the 40-year ban on the exportation of crude oil.
“Unless something changes, the oil market could drown in oversupply”, the International Energy Agency warned in its January report, estimating an oversupply of 1.5 million b/d in the first half of 2016 if Iran adds 600,000 b/d by mid-year. At 1743 GMT, the Brent front-month oil futures contract was down 0.23% or eight cents to $34.38 per barrel, while WTI was down 0.88% or 28 cents to $31.44 per barrel.
Huge layoffs are expected to continue in the United States and Canadian oil sector, with companies unable to deal with such low prices.
The U.S. now has almost 503 million barrels of commercial crude oil stockpiled, the Energy Information Administration said on Wednesday.
OPEC struck a more optimistic note in its monthly report, saying 2016 would see the start of the rebalancing process as deep capex cuts start to feed through to non-OPEC supply.
BP’s full year earnings were down 91 percent, Shell saw an 87 percent drop in earnings with profit down 53 percent, and ExxonMobil and Chevron saw full year earnings cut in half.
But the main feature of recent oil trading has been volatility, with price swings of more than 10 percent within two trading sessions frequently occurring since mid-January. Futures climbed as much as 4.1 percent earlier as the Bloomberg Dollar Spot Index, which tracks the currency against major peers, declined on signs of a slowing US economy. Gasoline inventories rose to a record high, soaring 5.9 million barrels to 254.4 million barrels.
The EIA also said Thursday that the oil futures market has entered a situation called contango, due at least in part to high inventories. Oil prices ended higher only Wednesday this week, when traders gave some credence to the speculation.
The rally in oil after news that inventories are still at record highs is a sort of counterintuitive move, which is probably where this adage comes from.
Offering calculation of cash operating cost for all oil fields, it said that at $30 a barrel for oil, 5.3 million barrels a day is cash negative, and at $25 a barrel, 7.7 million barrels a day is cash negative.
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The global oil surplus in 2015 was around 1.6 million barrels a day.
