OPEC forecast on Thursday that oil supply from non-member countries will fall more sharply next year, a development that would suggest its strategy of defending market share is working.
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The International Energy Agency (IEA) has predicted that oil markets will remain oversupplied at least until the end of 2016 in the light of sluggish demand and OPEC’s failure to curb production.
The cartel, which once regulated its supply to control global oil-price levels, now finds itself scrambling for customers.
On the Intercontinental Exchange (ICE), Brent crude for January delivery wavered between $39.51 and $40.69 a barrel, before closing at $39.75, down 0.34 or 0.88% on the day.
As per the Iran oil minister, Bijan Namdar Zanganeh, production will likely increase by 500,000 barrels a day within a week after the relaxation in sanctions and by 1 million barrels a day within a month.
“This downward trend should accelerate in coming months, given various factors, mainly low oil prices and lower drilling activities, ” Opec said.
OPEC failed to agree on an official output quota last week, leaving production near record highs despite the massive global glut that is keeping oil prices low.
However, this time – most recently at a meeting in Vienna on Friday last week – it has opted to keep the taps open.
“Much of the excess oil will be soaked up by 230 million barrels of new storage capacity additions, while United States inventories are only 70 percent full”, the IEA added.
Global oil supply, too, was unrelenting, hitting almost 96 million barrels per day.
The group maintained its projections for crude it will pump in 2016 at approximately 30.8 million barrels daily.
Oil prices fell further on Thursday in London, with Brent crude LCOF6, -0.98% dropping below $40 a barrel and the USA benchmark CLF6, -0.76% trading below $37 a barrel-both down more than 60% from highs in 2014.
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The IEA said demand in the current quarter was growing by 1.3 million barrels a day, down from 2.2 million barrels in the previous quarter.
