Non-OPEC supply will fall by 380,000 barrels a day next year, averaging 57.14 million a day, with an expected contraction in the USA accounting for roughly half the drop, the organization said Thursday in its monthly report.
This is the latest confirmation that OPEC is resolute in its fight to maintain market share, and try and squeeze smaller competitors out of the market.
“Much of the excess oil will be soaked up by 230 million barrels of new storage capacity additions, while U.S. inventories are only 70 percent full”, the IEA added.
Soaring output from Organization of the Petroleum Exporting Countries (OPEC) member Iraq has been a large contributor to that glut, with production there doubling over the past decade to about 4.3-million barrels a day, more than enough to meet all of India’s daily demand.
Brent crude futures were down 29 cents at Dollars 39.44 a barrel at 0551 GMT, a touch above a near-seven-year low hit earlier in the session at USD 39.38 a barrel.
U.S. benchmark West Texas Intermediate for January delivery fell to its lowest level since the beginning of 2009, losing 40 cents to US$36.76 (RM157.15) a barrel on the New York Mercantile Exchange. At the start of the year, production from countries outside the cartel was rising by 2.2 million barrels a day.
Oil prices have slumped to levels not seen since the global financial crisis as a result of OPEC’s strategy to defend market share against higher-cost producers. Crude oil declined to weigh on the global commodities markets pulling down metals as well as most other sectors.
The report also raised non-OPEC production growth estimates by 280,000 bpd to 1 million bpd, based on U.S., U.K., Brazil, Russia, and China production data. Early indicators for the fourth quarter of this year show growth easing to 1.3 million barrels a day, from a peak of 2.2 million barrels in the previous quarter.
PIRA Energy, a NY based global oil consultancy, said it expected crude prices to be under further pressure as onshore oil storage was likely to run out by the first quarter.
“We have downgraded our Brent oil price forecast from $54 per barrel to $51 per barrel for 2016 on the basis of a weaker end to 2015 than previously anticipated”.
Source: http://www.mercurynewsdaily.com/crude-oil-prices-plunge-to-fresh-7-year-lows-5899/
