Oil drifts lower on inventory build

The agency, of which New Zealand is a member, says under one middling scenario, oil will rise to only $US80 a barrel by 2020, and other scenarios suggest it could stay lower for much longer.

Brent crude futures were at $45.91 a barrel, up 10 cents following a 3.4 percent fall the previous day.

“You’re seeing more of a plateau in USA production rather than a decline, I’ve been expecting a decline in 2016 but I think the market is in a mode of show us rather than tell us and they’re just not seeing the numbers”, said Michael Hsueh, analyst at Deutsche Bank.

In the meantime, OPEC nations are exceeding their production limit of 30 million barrels per day by more than 1.5 million barrels, so it’s no wonder oil prices are so low.

Trading data in Reuters showed there seemed to be shift in sentiment towards an expectation of lower oil prices, with 90,000 contracts having been sold down since the beginning of November, pulling open interest off a historic high, as traders sell out of oil.

The OPEC price war was expected to deal a knockout blow to shale oil producers and check growth of renewables such as solar and wind power, but shale oil producers have been surprisingly resilient.

EIA forecast that Brent crude oil prices will average $54 per barrel in 2015 and $56 in 2016.

HONG KONG-Oil prices are slightly higher in Asia trade because of a weaker dollar on Thursday, though the gains may not sustain as the near-term outlook remains challenging.

Yet unrest in Iraq, now the Organization of the Petroleum Exporting Countries’ second-largest producer, and ageing infrastructure could hamper raising output there. By the end of the period, China could increase its renewable energy production capacity by 15 percent of total consumption.

But greater efficiency and a shift away from heavy industry for economic growth will mean China will need 85% less energy to generate each unit of future economic growth than it did in the past 25 years. The report is expected to show that oil stockpiles rose by 1.3 million barrels last week, according to a Bloomberg News survey.

Bloomberg reports that oversupply worldwide, created by OPEC’s refusal to cut production, has devastated the shale industry’s ability to produce oil at a competitive price, leading to rig closures throughout the sector.

The price drops came on the back of rising stockpiles in North America and slowing economies in Asia.