Crude oil prices remained at levels not seen since early 2009 on Friday as output in the Middle East continued to rise despite an already huge global glut, with analysts saying the price outlook for the rest of the year and into 2016 remained weak.
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“The oil market faces many uncertainties heading into 2016, including the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth and the responsiveness of non-OPEC production to low oil prices”, analysts wrote.
January WTI (West Texas Intermediate) crude oil futures trading on NYMEX fell for the fourth consecutive day in yesterday’s trade.
The Paris-based agency said that global demand growth is forecast to slow to 1.2 million barrels a day in 2016 after surging to 1.8 million barrels a day this year as support from sharply falling oil prices begins to fade. North Sea brent futures also hit a fresh seven-year on Thursday.
Predicting oil prices is usually a losing game – not least because of potentially high political risk factors associated with many key producing regions.
That might mean an epic battle between cheap conventional crude producers and shale producers lasting perhaps years, something that heavily oil-dependent economies in Opec and others, such as oil-powered Russian Federation, seem unlikely to have the stomach for.
Iraq’s soaring output has been a large contributor to the glut, with production doubling over the past decade to around 4.3 million barrels per day, more than enough to meet all of India’s demand.
“I am pessimistic about that, because within OPEC itself, there is not a unified agreement on the need to cut”, Novak said, responding to a question on whether Russian Federation may agree with Saudi Arabia on organized limits to production.
OPEC production rose by 230,000 barrels a day last month, according to secondary sources that track OPEC’s production levels. While crude oil inventories declined more than expected on Wednesday when the EIA released its inventory report, heating oil inventories climb and more than made up for the reduction in crude oil stocks.
The IEA said demand in the current quarter was growing by 1.3 million barrels a day, down from 2.2 million barrels in the previous quarter.
OPEC revised up its growth estimates for non-OPEC producers by 280,000 barrels a day to 1 million barrels a day, driven mainly by actual production data from the US, UK, Brazil, Russia and China.
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Brent futures edged up 43 cents $40.54 per barrel, while the US WTI crude futures increased 31 cents and traded at $37.47 per barrel.
