Even with the sagging oil prices, the American oil companies kept on pumping oil throughout the year.
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But just how bad are we talking about?
He also believes that with the prospect of an additional 500,000 million barrels from Iran during the first half much of the rebalancing depends on production cuts among the non-OPEC producers.
Brent, the global benchmark, gained 1.1% to $44.66 a barrel on ICE Futures Europe.
This is in accord with a broadly held view that while oil prices in general will remain under pressure over the medium term, WTI prices may fall faster and further than Brent. Let’s take a look at the facts. News of “Doom and Gloom” regarding the oil oversupply has mushroomed all over the news.
Prices switched between gains and losses with market participants expecting the latest oil rig count out of the USA later Friday.
According to the EIA, US commercial crude oil inventories increased by 0.3 million barrels from the previous week.
Kang said a stronger U.S. currency if United States of America interest rates are hiked in coming months could weaken demand for dollar-denominated crude oil futures as the contracts will be considered expensive to other currency holders.
For WTI, put positions at the $30 strike price have more than doubled since Nov 10, but have stayed flat at a more modest level for Brent. For a brief time, the smaller-than-expected stockpiles growth convinced a few traders and investors to cover short positions, helping prices to recover, but the move didn’t last and prices closed the week near their lows. Oil is essentially floating above the $40.00 price line for technical reasons, where trend-based analysis trumps reality.
Following the eighth successive weekly inventory rise, at 487.29 million barrels, current crude supplies are up 27.9% from the year-ago period and are near the highest level during this time of the year in 80 years at least.
All eyes will now be on the upcoming December 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria.
What needs to happen is that Saudi Arabia needs to show a willingness to cooperate over a broad and coordinated slowdown in oil production.
He believes that the key driver behind the recent and renewed weakness in oil prices has been the market fixation on the continued global overhang supply. The Cushing crude oil stocks rose for the fourth week in the last ten weeks.
The prices, he noted, will be determined by how quickly a balance between rising demand and an even bigger rise in supply can be achieved.
USA crude oil for January was down 38 cents to USD40.16 a barrel.
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Gasoline was the only energy market to climb.
