Less affluent OPEC states like Algeria, Angola, Nigeria and Venezuela, have been calling for production cuts in order to increase crude prices.
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Bouvier, meanwhile, claimed Japan and China would be the main beneficiaries of lower oil prices as they are among the world’s largest energy importers and said the “unexpected boon” for the countries’ would help fund investments across Asia. Tehran is expected to raise crude and condensates exports by as much as 700,000 bpd by end of 2016.
This will particularly be prevalent in exploration and production, as well as in drilling and oil-field services, Moody’s said, maintaining its negative outlook for those sectors.
Iranian news agency Shana quoted on Monday manager director of Iran’s Central Oil Fields Company, Salbali Karimi, as saying Iran’s cost of production stood $1-$1.5 per barrel, in a clear indication its output would remain competitive under any price scenario.
“There wasn’t enough bandwidth to stretch it even further, although there are a few comfortable shorts, but given the upcoming contract expiry, the low-liquidity environment with the holiday season approaching, as well as the looming Fed decision, there have been some positions getting trimmed”, he said. “We believe that speculative financial investors are partly to blame for the massive price slide”, they added.
USA oil prices have traded below the global benchmark for several years because US crude supplies are high and producers have had to discount their crude to attract buyers. That caused global prices to sink, narrowing the discount for USA crude and limiting the chances for producers to sell their oil at a better price in the export market.
“If there is no more supplies, there will be less supply to the market”.
Morgan Stanley said that “continued demand growth and less supply mean that the oversupply in oil markets could disappear by year-end” of 2016.
“For OPEC, we still can produce with the current price”, he said. That is likely to spur a renewed rise in US imports and erase the cost advantage of USA refiners who have made billions of dollars gorging on cut-price domestic crude.
Today, the world has too much oil – thanks largely to the American shale oil boom. USA crude rose 75 cents, or 2.1 percent, to $36.37.
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The oil price fall and rate hike in the USA, expected on Wednesday 16 December, also weighed on Asian markets overnight with the MSCI Asia Pacific index falling 1.1%, a fifth consecutive day of losses, according to the FT.
