Brent crude oil prices moved up 3.2 percent to start trading Wednesday in NY at $33.77 per barrel. However, no concrete statement regarding a possible emergency meeting between OPEC and non-OPEC producers was made, lowering hopes of such a talk actually happening.
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According to OPEC latest Oil Market Report, Saudi Arabia produced 10.088 million barrels of oil per day in December 2015.
“Non-OPEC marginal barrel production in the next six months will be sensitive to sustained low oil prices, whereby its break-even point would not be able to tolerate the price conditions at that time”, it said.
The US Energy Information Administration (EIA) reported on Wednesday that crude inventories rose by 7.8 million barrels for the week ended January 29.
The markets shrugged off government data showing United States crude and gasoline inventories rose to record levels last week.
A rally last week driven by speculation that Russian Federation and members of the Organization of the Petroleum Exporting Countries would reach an agreement to slash output in the oversupplied market has fizzled out amid scepticism such a deal would be reached. Saudi Arabia and other Arab countries are also fueling oil at their highest potential to keep their market share against oil from American and Iranian regions.
Weaker demand is only adding fuel to the proverbial fire, with the current Opec oil production at 32.60 million barrels per day (bpd), its highest in years.
Oil fell 2 per cent in volatile trading on Thursday, as support from a weakening dollar was overshadowed by scepticism that cash-strapped OPEC member Venezuela’s effort to lobby crude producers for joint output cuts would succeed. He added that Oman is ready to join the initiative to ensure a fair price for every oil barrel.
“As they (producers) continue to disappoint, we’re going to trade lower, until the market forces them to do something and I think that’s at a much lower price than here”, said analyst John Kilduff, partner at Again Capital LLC in NY. The Russian ruble hit historic lows against the US dollar in January, while Venezuela is predicted to suffer the worst recession on the globe in 2016. Global demand is forecast to increase by about 1.3 million barrels a day, while supply from outside the producer group is expected to contract by about 660,000 a day, he said.
Meanwhile, the prolonged downturn in prices has crushed the oil majors’ results.
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Changing hands above US$35 for the second time in two weeks, Brent crude is up more than 7%.
