“Our general assumption is on a market with low prices, so the price can drop as low as possible as we are prepared for the worst scenario”, the official said.
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Traders said that the low prices were a combination of structural oversupply and seasonal price weakness.
The price of Brent crude oil opened today at $39.55, but saw its price slip to a day low of $38.90 – the furthest the commodity has fallen seen since December 2008. USA crude rose 69 cents, or 1.94 percent, to $36.31.
The WTI Crude Oil market continued to fall on Friday, as this market simply can not find any type of support.
Nevertheless, it is business as usual in Iran where production costs in some central oil fields wallow at $1-$1.5 a barrel. Moreover, data from the Commodity Futures Trading Commission showed that hedge funds had increased their bets on further downside in crude oil prices, to an all-time high.
In early trade, USA benchmark West Texas Intermediate was 16 cents down at $35.46 around 0500 GMT, while Brent crude was 26 cents lower at $37.67.
On its last report, Credit Suisse mentioned that investors are most bearish they have been on oil since 2008. Libyan representatives at a peace conference in Rome on Sunday pledged to sign a UN-brokered deal on Wednesday that would be “the only legitimate basis for a solution” to the country’s crisis, said US Secretary of State John Kerry.
The resulting gasoline demand is expected to spur refiners to produce as much fuel as they can and should bolster 2016 crude demand as long as refining margins remain profitable.
The International Energy Agency says it expects the oil glut will extend to at least late 2016, with OPEC showing “renewed determination” to maximize its production.
“The oil and energy market can not last long with low prices”, maintained Karimi concluding “crude oil has an optimal price at which costs and benefits for investors, producers and consumers are reasonable; therefore, sudden changes in the economy section need to be prevented in order to avoid ambiguities for the consumer and the producer”.
According to Bloomberg.com, China’s apparent oil demand fell 1.1% to 10.19 millions barrels per day, in November.
US oil output has begun falling since it hit a 43-year peak in April 2015 of 9.6 million barrels per day, although the decline has been slower and shallower than many analysts expected, weighing on prices. Despite this, Energy Information Administration (EIA) data shows production rates to be still higher than the 8 million barrels a day average production before the shale boom in the US.
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On the downside, Japan’s oil consumption fell in October, after several months of growth.
