Trading data in Reuters showed there seemed to be shift in sentiment towards an expectation of lower oil prices, with 90,000 contracts having been sold down since the beginning of November, pulling open interest off a historic high, as traders sell out of oil. As you can see from the chart below, US tight oil production starts to ramp up at around $70 a barrel.
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Brent for December settlement lost as much as 38 cents, or 0.8 percent, to $47.06 a barrel on the London-based ICE Futures Europe exchange.
The United States energy department said that domestic output may decline further even though gains were limited.
China’s National Energy Administration said Wednesday it aims to advance efforts to push carbon out of the Chinese economy under the terms of a five-year plan ending in 2020. The agency also pointed out that in future, improvement in operational and production efficiency will reduce the amount of energy needed to drive economic growth by more than 80%.
A weekend report from China, the world’s second biggest economy and number-one energy user, showed exports and imports – particularly of crude – tumbled last month.
The market was “bouncing back and forth today”, pulled by reports from the global Energy Agency and the US Department of Energy, and OPEC suggestions that the cartel may cap production at 30 million barrels, said Phil Flynn of Price Futures Group.
Moreover, in the event that the price of oil remains at $50 for a barrel till 2020 and a cheaper conventional fuel alternative becomes available, the burgeoning electric vehicle and biofuel market would face a setback. A boom in the USA shale oil industry has helped almost double total U.S. output in recent years.
That investment “will continue to decline next year”, Mr Birol said. Crude oil production is forecast to decrease through the third quarter of 2016 before growth resumes late in 2016. The report comes just before an important December 4 OPEC meeting in Vienna. It will be the largest monthly increase of Iraqi oil in the USA since 2012, according to Bloomberg.
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Refineries needed a heavier blend and for that goal, imports of heavier blends of crude were crucial, he said. The country would, however, need massive investment to retain its production target.
