At the same time, the Federal Reserve Chairperson Janet Yellen’s comments were less optimistic about global demand, hence adversely affecting crude oil.
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“The investment cycles outside the USA are much longer”. The 2016 numbers are supportive of prices because of the “huge swing” in the trend of non-OPEC production growth, she said.
But even with a diplomatic agreement this week it would take time for Iran to start exporting large amounts of crude again as the sanctions on exports would first need to be formally lifted and Iran’s crumbling oil infrastructure modernised.
With oversupply ongoing and abundant economic risk, the worldwide Energy Agency (IEA) and several banks said they had lowered their oil price forecasts.
REUTERS/Yehuda Ben ItachCrude oil streams through the desert in south Israel, near the village of Beer Ora, north of Eilat, December 4, 2014.OPEC said it expected demand for its own crude to rise by 860,000 bpd in 2016 to 30.07 million bpd.
Other analysts say demand could catch up with supply more quickly than that.
It said Saudi Arabia had told it that it pumped 10.56 million bpd last month, up 231,000 bpd from May.
The market’s direction in the next five years could depend on the 47% of global supplies outside the USA and OPEC.
“Everyone seems to be staring at the demand numbers”.
The euro jumped on the news, hitting highs of 1.1197, before turning lower, while the USA dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 96.53, up 0.6% for the day. “All of it’s extraordinarily subject to revision or it’s extraordinarily volatile”.
The count of oil rigs in the U.S increased to 645 adding five more last week according to data from Baker Hughes Inc. On Friday, benchmark Brent crude was trading at $59.44 a battle and US light crude was around $53.62. Numerous rigs were closed in the US, where production costs are higher than in the Middle East.
According to Bloomberg, refiners based in Spain and Greece have indicated that they are ready to resume purchasing crude oil from Iran when the country returns to oil markets. “Total United States liquids production is expected to grow by 3,30,000bpd, just one third of the growth of 9,30,000bpd expected this year”, it said. Global oil demand growth will slow, the agency predicted.
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Chester Dawson in Anzac, Alberta, contributed to this article.
