Its report said world oil demand in 2016 is uncertain, “depending on the pace of economic growth, development of oil prices, and weather conditions, as well as the impact of substitution and energy policy changes”.
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Industry experts say the next OPEC meeting in June will be crucial, especially if oil prices have not improved by then.
The analysts surveyed by Platts – the energy information arm of McGraw-Hill Financial Inc. – had expected crude stocks to go down by 1.2 million barrels.
Crude oil futures prices slipped to near seven-year lows on Monday after the Organization of the Petroleum Exporting Countries (OPEC) failed to reach a consensus to cut production in response to the supply glut and depressed demand.
USA energy officials expect oil prices to increase slightly in 2016 but warned of “significant uncertainties” that could enable ongoing volatility in the market.
In a December 4 meeting, the group that produces 40% of global crude oil supplies, made a decision to increase its production rates, despite internal and external pressure for the contrary. Unfortunately, the problem was that these projects became completely unprofitable thanks to the steep decline in crude prices over the last eighteenth months.
The group maintained projections for the amount of crude it will need to pump next year at 30.8 million barrels a day.
“Reductions in 2015 cash flows and capital expenditures have prompted companies to defer or redirect investment away from marginal exploration and research drilling to focus on core areas of major tight oil plays”, the report said.
A pullback in the level of production led to the larger-than-expected stockpile drawdown with the world’s biggest oil consumer even as refinery usage slowed.
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.
Output from OPEC rose in November by 230,100 barrels per day to a daily total of 31,695 million, which is its highest since April 2012.
Brent futures are down more than 6% this week and having dipped below $40 per barrel there are renewed expectations it might test 2008’s low around $36, it said.
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The oil market continues to go down, making people wonder whether there will ever be a time to buy oil stocks again.
