IEA’s Birol said low prices may attract some demand, so the market “may well see some surprises in the next few years balancing the market but with higher prices than we think for now”.
Advertisement
The EIA report showed another build in inventories during the week ended December 11, with crude oil inventories in the USA increasing by 4.80 million barrels during the period, an indication of supply exceeding demand.
“Today, OPEC is not the structure regulating this market”, he said.
Even though global oil stock will remain below storage capacity, Goldman said the rebalancing is “far from achieved” as U.S. rig count and exploration and production guidance are “too high” to achieve the required supply decline.
U.S. benchmark West Texas Intermediate (WTI) for January delivery shed 57 cents at $34.95 a barrel on the New York Mercantile Exchange. The Organisation of Petroleum Exporting Countries (Opec) abandoned output limits at a December 4 meeting while the US Federal Reserve increased interest rates this week, boosting the dollar and reducing the appeal of commodities traded in the US currency. Inventory levels in America reached record heights earlier this year, which leads us to believe that the United States would be exporting crude oil at an accelerated rate to ease pressure on domestic inventory levels.
According to market experts, India produces around 3.5 mbpd of crude oil and this has been stable for last two years.
OPEC’s dumping oil prices, Saudi Arabia’s desire to constantly expand its market share, and expectations of coming of Iranian oil after removal of sanctions on Tehran, have forced the USA to urgently take the historic decision to start exporting its own oil.
Russian Federation has long maintained informal contacts with OPEC and hinted in the past it might be ready to cut oil production to prop up prices.
Prominent oil trader Pierre Andurand said prices could fall below $25 a barrel in the first quarter of 2016. The appreciating dollar weighed on dollar-denominated crude oil.
Recently after OPEC’s 168th meeting, crude prices tumbled down seeing no production cuts from the cartel instead continuing with their current levels of production i.e 31.50 million barrels per day.
Crude prices were mixed in late Asian trading on Friday after the U.S. oil benchmark closed at its lowest level since February 2009 on worsening oversupply concerns and a stronger dollar. Another key measure, Brent LCOc1 also dropped nineteen cents to $36.87 per barrel.
That view is driven by the manufacturing PMI numbers from China, showing a slowdown in industrial activity in the world’s second largest consumer of crude oil.
Advertisement
“The post-OPEC oil price decline accelerated as the discord between members became more apparent and the lack of a supply response more certain”.
