United States crude oil prices have now been lower than $50 per barrel for longer than they were during the height of the global credit crunch in late 2008/early 2009, when they were under that level for 74 straight days and another 14 intermittent days before and after. Saudi Oil Minister Ali al-Naimi was quoted by the Wall Street Journal as saying Thursday energy companies should be investing heavily because demand was expected to return.
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Crude has slid 45% in the past year amid signs the global glut will persist as the Organization of Petroleum Exporting Countries continues to pump above its collective quota and Russian production climbs to post-Soviet highs. Generally though, he said oil markets remained bearish due to oversupply.
Crude futures have already lost around 60 percent of their value since mid-2014 as supply exceeds demand by roughly 0.7 million to 2.5 million barrels per day to create a glut that analysts say will last well into 2016.
Front-month USA crude futures was at $41.02 per barrel at 0717, up 28 cents from their last close.
WTI options for December will expire on Tuesday.
US production last week totaled 9.182 million barrels a day, slightly lower than the 9.185 million in the week earlier.
FX NEWS sources believe that a lower inventory will give some sort of support to the crude oil prices.
US futures fell 17 cents to $40.57 a barrel, after earlier falling toward $40, a key milestone for the oil market that once breached could see oil fall further, to lows not seen since 2009.
“We expect that inventories will build counter-seasonally (stocks usually fall in winter) in 4Q15 and that the market will remain oversupplied through 1H16”, it added.
Big oil suppliers have started requiring prepayment when selling cargoes of crude and refined products to Venezuela’s PDVSA, a bid to curb potential risks from the state-run company’s well-known cashflow woes, sources involved in the deals told Reuters.
“The market is actively seeking storage solutions”, Jefferies said, but with January 2017 prices now trading around $6 a barrel above those for January 2016, the spread is too low to make floating storage attractive as freight costs still have to be included.
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The speculator group cut its combined futures and options position in NY and London by 27,456 contracts to 127,351 during the period.
