According to the OPEC report, fall of oil supply to the global market is expected on all the countries of the former Soviet Union (FSU) in 2016.
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This, along with signs of dipping US production, lent prices some support.
Brent crude prices will continue to struggle due to a large global commercial oil stock surplus, which PIRA estimates will total 500 million barrels above normal levels by end 2015.
The potential lifting of worldwide sanctions against Iran, meanwhile, could add those reserves to the global market. Supply rose by 230,000 bpd in November to 31.70 million bpd, said the report, citing secondary sources.
West Texas Intermediate for January delivery declined as much as 36 cents to US$36.40 a barrel on the New York Mercantile Exchange and was at US$36.54 at 4.06pm Singapore time.
The IEA predicts that will slip back to 1.2 million barrels a day next year.
Benchmark Brent crude dropped to a six-year low in London this week after OPEC effectively scrapped its output ceiling at a December 4 meeting as de facto leader Saudi Arabia stuck to a policy of squeezing out rival producers.
He added, “So you are talking about an industry that there is a massive lack of investment so the oil price can not stay at this level, because the supply is falling off quite dramatically”. For 2016 OPEC expects an increase of 1.25 million barrels per day, unchanged from last month’s forecast, to 94.13 million. In particular, oil tanked to a seven-year low on Monday after the Organization of the Petroleum Exporting Countries (OPEC) failed to address the growing supply glut. Early indicators for the fourth quarter of this year show growth easing to 1.3 million barrels a day, from a peak of 2.2 million barrels in the previous quarter.
US oil companies are clearly hurting, but OPEC’s strategy to defend its market share by forcing others to close wells is causing pain for the cartel’s members too.
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Analysts said that the oil sector is expected to stay under pressure in the near term as output from global oil producers is likely to rise further in the future.
