Benchmark crude prices approached seven-year lows in early December after OPEC opted to continue producing at record levels to defend its market share.
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“U.S. tight oil production, the main driver of non-OPEC supply growth, has been declining since April”, OPEC said in the report.
“Consumption is likely to have peaked in the third quarter and demand growth is expected to slow to a still-healthy 1.2mn bpd (barrels per day) in 2016, as support from sharply falling oil prices begins to fade”, the energy watchdog said in its monthly oil report.
Even if crude oil prices ramp up again, the U.S. can flood the market with its production. ― File picSEOUL, Dec 11 ― Oil headed for the biggest weekly decline since March amid speculation OPEC’s decision to effectively scrap production targets will keep the market oversupplied.
Thursday at the close, WTI yields 40 cents to 36.76 dollars on the New York Mercantile Exchange (Nymex).
On the Intercontinental Exchange (ICE), Brent crude for January delivery wavered between $39.51 and $40.69 a barrel, before closing at $39.75, down 0.34 or 0.88% on the day. Analysts wonder whether these measures alone are enough to sustain the new lows of crude oil prices. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
Iranian oil will return to the markets by next year after western sanctions are lifted under a landmark deal reached in July to curb Tehran’s nuclear programme.
Opec warned that its “oil demand forecast for 2016 is subject to considerable uncertainties, depending on the pace of economic growth, development of oil prices, and weather conditions, as well as the impact of substitution and energy policy changes”.
On Thursday, OPEC said it pumped 31.695 million barrels of crude per day in November, an increase of 230,100 from its level a month earlier.
So, by the end of 2015 the demand for “black gold” in the world is expected to rise by 1.53 million bpd up to AZN 92.88 million barrels that is by 30,000 barrels more than the previous forecast.
“There is evidence the Saudi-led strategy is starting to work”, the IEA said.
“Companies must repeat the same size of cuts they’ve already announced to be able to cope with oil prices this low”, said Alexandre Andlauer, a Paris-based oil industry analyst with AlphaValue SAS.
West Texas Intermediate (WTI) U.S. crude futures were at $36.41 per barrel, down 35 cents after touching $36.12, their lowest since February 2009.
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Oil services firm Baker Hughes (N:BHI) said Friday that US oil rigs fell by 21 to 524 for the week ending on December 4.
