“The process of shaving an additional $4.50 a barrel off of the crude benchmarks could require another couple of weeks”, said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
Advertisement
SINGAPORE – Oil prices rebounded in early Asian trade on Thursday after falling about 3% in the previous session, supported by an unexpected fall in U.S. crude inventories. Brent crude, the benchmark for global oil prices, slid $1.02, or 2.1 percent, to $47.30 a barrel in London.
Randy Frederick, vice president of trading and derivatives at Charles Schwab, said investors don’t know what the Fed will do at its meeting next Tuesday and Wednesday and the market may remain volatile until then. “And what we’ve seen is a tick up in production from all the OPEC countries”, Abramo said.
There are also signs of a return of output from Nigeria and Libya, two countries whose crude exports have been hampered by conflict and unrest. At its peak, oil markets had an excess supply of more than two million barrels per day. “That is the big question today”, the IEA said.
Despite fears over slumping demand, Asian growth is expected to continue.
“The market could care less about strong physical markets when it sees potential for another 600,000 barrels per day of crude”, Scott Shelton, broker with ICAP in Durham, North Carolina, said, referring to the anticipated rise in Libyan and Nigerian supplies. “We’re not sure other producers are prepared to offset that much of an increase”.
China and India, which had been key drivers recently of demand growth, are “wobbling”, it said, while a slowdown in the United States and economic concerns in developing countries have also contributed to the surprise development. High-cost OPEC producers have been hit particularly hard. However, above-average rainfalls in the second half of the year have since erased that demand. China used to be the major oil importer before the economic downturn a year ago. But a return to normal in the fourth quarter could lead to “at least a partial” rebound, the agency said.
Advertisement
The cartel predicted that supplies would grow by 200,000 barrels per day, with an average production of 56.5 million barrels per day. A number of factors hit prices including worries over the scale of the economic slowdown in China and high supply levels from OPEC countries, notably Saudi Arabia, as they seemingly strove to drive USA shale gas producers out of business. Oil prices have plummeted since mid-2014 as a result of an oil glut and the failure of demand to keep pace. US equity markets were down almost 2 percent, extending the bearish sentiment across risky markets. U.S. West Texas Intermediate futures fell 85 cents, or 1.9%, to $44.05 U.S. a barrel. The Standard & Poor’s 500 index fell 32.02 points, or 1.5 percent, to 2,127.02.
