The 12-member oil cartel said on Thursday in its monthly oil market report that it pumped about 32 million barrels of oil per day in November, the highest in three years, surpassing the record it hit just a few months prior.
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The Organization of the Petroleum Exporting Countries revealed crude output rose by 230,000 barrels per day (bpd) to 31.7m bpd in the last month.
“Oil prices fell 40% after OPEC’s meeting in November a year ago, a similar decline this time would mean Brent crude at $25 per barrel”.
“Upending year-earlier forecasts that Chinese gasoline demand would struggle in 2015, confirmed data for the first ten months of the year show growth of roughly 10.4 percent year-on-year” the International Energy Agency said in its monthly oil report.
Some analysts worry that prolonged low oil prices could trigger shake-ups in the wider market such as job losses.
The IEA said OPEC’s decision last week to impose no ceiling on its output appeared to signal a renewed determination to maximise low-priced OPEC supply and drive out high-cost non-OPEC production regardless of price. Prices have lost more than 13 percent since the beginning of the month.
Futures of Brent and US crude’s West Texas Intermediate (WTI) were up more than $1 a barrel in an immediate reaction to the data, before turning negative later as the market’s attention turned to the bearish distillate numbers. Some have attributed the oversupply in the market to the boom in the country.
Iraq’s soaring output has been a large contributor to the glut, with production doubling over the past decade to around 4.3 million barrels per day, more than enough to meet all of India’s demand.
“As such, US$20 per barrel is not our baseline scenario and it is quite unlikely that the market will set the oil price to be at US$20 per barrel”, he told Bernama.
The story was not any different for the global benchmark for crude oil prices, Brent, with the front-month futures contract trading down by 77 bps at $39.80 per barrel, breaking the $40 per barrel psychological level once again.
But drillers around the world – and particularly in the United States – have slashed capital spending in order to offset declining revenues, creating the expectation that new production will not keep pace with declining output in existing wells.
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In 2016, demand for OPEC crude is forecast at 30.8 mb/d, an increase of 1.5 mb/d over the current year and unchanged from the previous assessment.
