“We are seeing nothing unusual about this week’s price bounce given the fact that the entire complex had become much oversold based on virtually all of our technical indicators”, Jim Ritterbusch of Chicago-based oil consultancy Ritterbusch Associates said in a note. Any change in U.S. oil policy will have “zero” impact on the market because the country remains an importer, OPEC Secretary-General Abdalla El-Badri said yesterday.
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He noted that in short term oil prices can experience effect of the extent of USA shale oil output decline; rate of Iran’s possibilities to ramp up production; and demand growth in Asia and the US. The rising demand from India could benefit the crude oil market.
China said Tuesday that it would temporarily stop adjusting gasoline and diesel prices, which could raise costs for consumers and lower consumption.
“The threat is mainly against West African producers who now may see more competition from US oil producers against their customers”, said Torbjorn Kjus, chief oil analyst at DNB Markets.
Oil prices plunged last week since the Organisation of the Petroleum Exporting Countries (OPEC) on December 4 chose to keep crude production pumping at current level in the already over-supplied market. Outside OPEC, Russian production is also showing no signs of slowing. However, this may not be enough to improve sentiment with traders and money managers…
OPEC expects global oil demand to grow by 1.25 million bpd in 2016 and non-OPEC supply to decline by about 400,000 bpd as the price collapse hurts rival producers, more than halving the supply glut compared to this year to about 900,000 bpd. Hong Kong gave up early gains to a late sell-off and ended down 0.2 percent, Sydney fell 0.4 percent and Shanghai edged 0.3 percent lower.
Risk consultancy Control Risks said in its RiskMap 2016 outlook that “the security and political risk outlook is worse than at any point in the past decade”, citing a mix of terrorism threats, political instability and economic uncertainty. While the USA repealing restrictions on crude exports could allow unfettered access to supplies, prices aren’t competitive enough to attract foreign buyers, according to Energy Aspects Ltd. The nation’s stockpiles are still more than 120 million barrels above the five-year seasonal average. “But I’d be surprised if they don’t come back and take it down”.
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Brent and WTI slumped to the lowest price in more than six years this week and Citigroup predicts that markets will face further pressure next year as Iran revives exports with the end of worldwide sanctions.
