The USA benchmark, West Texas Intermediate for December delivery, moved up 34 cents to settle at $44.21 a barrel on the NY Mercantile Exchange.
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Crude oil prices fell on Wednesday after industry data showed an increase in US stockpiles, and as analysts said USA output had been surprisingly resilient in the face of lower prices.
“We continue to think the market will remain in surplus through most of 2016, which is likely to restrict the upside for prices, particularly over the fourth quarter of 2015 and the first quarter of 2016”, British bank Barclays said in a market commentary. The analysts estimate the production amount every day to be something between 0.7 and 2.5 million barrels that too without a buyer.
Supply from the Organization of the Petroleum Exporting Countries held steady in October at 31.76 million barrels a day, with declines in Iraq and Kuwait offset by higher supply from Libya, Saudi Arabia and Nigeria, the IEA said.
Before explaining why the IEA must be wrong in these projections, let’s remind people of their last few forecasts.
Opec has forecast that demand for its crude next year will average about 30.8m b/d as demand rises and output outside the cartel slips. Supplies are more than 100 million barrels above the five-year seasonal average and the highest for this time of year in more than 80 years, according to the EIA. This fresh influx of crude imports comes as long-term cheap oil drives down America’s energy outlook for 2016. “This is usually a bullish time of year when refinery activity picks up, boosting demand”.
The global Energy Agency has released its yearly energy report, including their projections on oil prices. While it has peaked in April at 9.6 million barrels a day, production in the US has recently stabilized.
Smith noted that USA oil inventories are less than eight million barrels below record heights set earlier this year. OPEC ministers are scheduled to meet in Vienna on December 4 to discuss the future of crude oil policy.
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Iraq is OPEC’s No. 2 crude producer. OPEC member Ecuador’s oil minister said on Wednesday that the only way to balance the market was to cut production and that it aimed to reach an agreement on that at the group’s December meeting.
