Brent for December settlement dropped 47 cents, or 1 percent, to $49.09 a barrel on the London-based ICE Futures Europe exchange.
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“We think that the market is probably right to focus on the more positive aspects of the report, such as higher demand for both crude [oil] and products”, he added.
Crude oil prices rose Friday amid word that USA producers continue to close down oil rigs amid the ongoing price war with OPEC.
Venezuela’s weekly oil basket price fell further back below $40 as oil prices around the world slipped and as the crucial USA market remained well supplied. Total USA oil and liquids production is widely expected to stall this month and begin to decline from early next year.
If punishing its own customers and incentivizing rival production weren’t enough, OPEC’s efforts to keep the party rolling in the 1980s caused even more problems for its members. “In the end, OPEC’s strategy is creating the conditions for higher prices for longer in a couple of years’ time”.
The loss from producing a barrel of fuel oil from crude has also narrowed sharply in the past month, supporting prices for the heavier Saudi grades that yield more of the residue fuel, they said.
When oil prices peaked in 1980, OPEC members raked in more than US$1 trillion in daily revenue in 1982 dollars; by 1986, these daily proceeds had tumbled to less than US$250 million in 1982 dollars-a decline of more than 70 percent.
Energy stocks sold off hard from late 1980 through summer 1982, driven in part by declining oil prices in nominal and inflation-adjusted terms as well as a severe economic downturn and bear market in U.S. equities. Players who have higher breakeven costs will be the ones who will blink first and thereby reduce their production levels. By January of 2009, Venezuela’s oil basket had fallen to a low of $27.10 a barrel. On the supply side, the market’s gaze has gravitated to that most closely watched of oil market variables – the response of U.S. shale output to weaker oil prices.
On Monday Russian Federation reported that its October oil production hit a post-Soviet record of 10.78 million barrels per day.
The Opec kingpin could raise the December official selling price (OSP) for flagship Arab Light by 30-60 cents a barrel from a month ago, a survey of six refiners and analysts showed.
“A forecast of $80 barrel five years out is certainly not demanding from an historical perspective” said Edison Investment Research, referring to OPEC’s forecast.
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“We believe that oil prices will remain lower for a longer period, as large built-up inventories and oversupply cause oil prices to increase at a slower rate”, says Steve Wood, a Moody’s managing director of corporate finance. However, the price of oil and natural gas has to make an upward recovery for any significant drilling to take place over the coming months and years.
