The agency, which coordinates energy policies of industrialised countries, said that while it did not believe oil prices could follow some of the most extreme forecasts and fall to as low as $10 per barrel, it was equally hard to see how they could rise significantly from current levels.
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OPEC’s nearly total refusal to even consider cutting production is the big driver of oil’s stubborn low prices, and that’s reflected in the IEA saying that the confederation of producers pumped out 280,000 more barrels every day last month.
The IEA’s global demand growth for 2016 is forecast at 1.2 million barrels a day, unchanged from last month’s report.
Global oil supply dropped 0.2 mb/d to 96.5mb/d in January, as higher OPEC output only partly offset lower non-OPEC production.
The implication of the stockpile essentially means supply outweighs demand hence, a drop in price of oil. Neither EconoTimes nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.
“Supplies from the group during January stood almost 1.7 million bpd higher year-on-year”.
The latest decline was the result of uncertainty of a deal among oil producers on cutting supplies.
Global demand for oil is increasing but it has not been enough to absorb the amount of crude produced as China’s economy has weakened. In the past several meetings of OPEC member states in Vienna, the cartel refused to reduce its crude production to defend its market share, and OPEC has to keep pumping over 30 million barrels of crude oil per day.
The disappointed part of the data is USA crude production only fell 28,000 barrels to 9.186 million barrels a day last week, according to the EIA report.
The IEA predict that stock building could continue at a speed of 300 million barrels a day in the 2nd half of 2016. “By that time, every storage tank and swimming pool in the world will be filled with oil”, Mr. Dudley said, warning that a price recovery would likely start slowly. “Perhaps resilience still has some way to go”.
Commodity prices were backed by comments from Iranian oil officials that the country is ready to resume trade talks with Saudi Arabia regarding the present conditions in the world oil markets.
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Oil prices rebounded on bargain-buying in Asia today after the previous day’s plunge but analysts warned any gains would be limited as the global glut that has hammered markets showed no sign of letting up.
