Oil prices dropped on Friday as market expected that supplies would exceed the demand. And, while most OPEC countries do not seem to be willing to cut down on their outputs – economies have to keep running, the largest producer in the world, Saudi Arabia, said it was willing to take the measures necessary to stabilize the market. Production of crude oil increased about 17 percent (rising from 7.4 to 8.7 million barrels per day), while US production of natural gas increased 6 percent (rising from approximately 73 to 77 billion cubic feet per day).
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U.S. President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation, while NATO Secretary-General Jens Stoltenberg said the military alliance stood in solidarity with Turkey. Brent, the global benchmark, fell 53 cents, or 1.2%, to $44.93 a barrel on ICE Futures Europe.
“There are still tensions going on and they are giving a bullish push to prices”, said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
Prices had surged Tuesday on heightened geopolitical tensions sparked by Turkey’s shooting down of a Russian fighter jet on the Syrian border.
Oil prices headed south a year ago after OPEC embarked on a strategy of protecting its market share by pumping more crude despite falling prices. While the booming US output has tailed off this year, oil stockpiles remain near record highs.
“From a fundamental point of view, an increase in OPEC’s production quota is much required; Indonesia’s inclusion into the cartel will add roughly 800,000 barrels a day into the overall production pipeline will give OPEC the ideal excuse to propose a higher quota”, said Gan.
Likewise, the EIA reported that nationwide USA commercial crude oil inventories rose by 1 MMbbls (million barrels) to 488.2 MMbbls for the week ending November 20, 2015. Similarly, the USA average regular-grade gasoline price has fallen $0.82/g from the November 2014 average of $2.91/g.
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The minister’s comments were supported during a subsequent Saudi cabinet meeting, with the Saudi press agency stating: “The Cabinet stressed the Kingdom’s role in the stability of the oil market, its constant readiness and continuing pursuit to cooperate with all oil producing and exporting countries”. Diesel is down for four straight weeks, losing 1.89 cents, or 1.4% this week.
