United States Department of Transportation statistics show that U.S. airline fuel consumption was only 16,730 tonnes in 2015, compared to an all time high of 18,427 tonnes in 2007, even though the number of passenger miles flown increased by 3 per cent over the same period.
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Since mid-2014 the benchmark oil price, Brent Crude, has plummeted from $110 a barrel to $34.
Yes, lower crude oil prices will result in downward pressure on the price we pay for petrol when filling up our cars – but don’t forget the other key factors that determine petrol prices are tax and refinement and distribution costs.
West Texas Intermediate oil prices are up 11% to $29.19 a barrel in recent trading. Top Opec exporter Saudi Arabia told Opec it increased production to 10.23 million bpd from 10.14 million bpd in December.
Read:Will falling oil prices bankrupt the likes of Russia, Saudi Arabia?
OPEC is therefore hoping that producers in countries like the US, Canada and Russian Federation decrease their oil supply. “There is only one month, the UAE said they would make no concession”.
“After WTI reached a fresh 12-year low on Thursday, this triggered some kind of bargain-hunting because there is no real news driving the slump except for the oversupply issue”, said Bernard Aw, market strategist at IG Markets in Singapore. Still, “the market is increasingly anxious about the outlook for demand and in particular demand on the USA market”. After a late break in oil that drove it to the lowest level since 2003, we rebounded on an OPEC production cut story. The Organization of the Petroleum Exporting Countries earlier Wednesday cut its forecasts for global oil-demand growth, citing lower consumer appetite in places such as Russian Federation and Brazil despite low prices.
Last week Saudi Arabia’s oil minister Ali al-Naimi talked about cooperation between OPEC members and other oil producers to stabilize the global oil market with his Venezuelan counterpart, but there was no agreement to hold an early meeting of suppliers.
OPEC and Russian Federation have agreed to production cuts at several points over the past few decades and Russia’s history of compliance with those cuts has been poor, Richards mentioned.
Trading activity in Asia remained low due to China’s New Year holiday, which lasts all week and as Japan is also on a public holiday.
The renewed decline came despite the weekly US Department of Energy report showing US oil stocks dropping recently, but from levels too high to change the big picture.
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In fact, OPEC increased production in January by 280,000 barrels per day to 32.6 million, according to an International Energy Agency report released Tuesday.
