IEA says oil supply glut won’t let up soon

Its low in August was $37.75. Meanwhile, indications emerged that commodity supplies would remain abundant longer than many investors had expected.

Echoing comments this week from Abdalla El-Badri, Opec’s secretary general, Mr Al Mazrouei added: “We can not do this alone, and it is evident that everyone has to do his share”. In the US, crude storage levels hit 487 million barrels in early November, closing in on the 80-year high of 490 million barrels hit earlier this year. Share prices of miners and oil producers plunged, weighing on stock indexes.

The Dow Jones industrial average fell 26.23 points, or 0.15 percent, to 17,731.98, the S&P 500 lost 2.7 points, or 0.13 per cent, to 2,079.02 and the Nasdaq Composite dropped 1.01 points, or 0.02 per cent, to 5,082.23.

The renewed selloff follows several weeks of stability across commodity markets.

Surplus oil inventories are at the highest level in at least a decade because of increased global production, according to the Organization of Petroleum Exporting Countries (OPEC).

Oil inventories have expanded to a record of nearly 3 billion barrels because of strong output from OPEC and elsewhere, the global Energy Agency said in a report on Friday.

“The more shale oil they produce, the more heavy crude they need to blend with that”, he said.

On Friday, U.S crude price marked its fall for the consecutive third session trading at the lowest two months or a little more.

US crude traded slightly above $40 a barrel while benchmark Brent was less than $2 from setting new 6-1/2-year lows.

A drop below $40 a barrel is unsustainable for an extended period, a few analysts say, because less-efficient companies would be forced to halt production due to a lack of cash flow.

Confirming the current plentiful oil supply, the IEA noted that “global oil supplies breached 97 mb/d in October, as non-OPEC output recovered from lower levels the previous month”.

Birol said the Middle East, which already provides about a third of the world’s oil, could see exports equate to more than two thirds of total supply, particularly in a sustained environment of $50 oil prices. “It has been a suffocating move”, as the selling put further pressure on prices. It would also help protect producers against an unseaonally cold winter.

Inflated inventories have spread across the world from the United States to the developed economies of Europe, and now China, said the IEA.

The worldwide Energy Agency has released its yearly energy report, including their projections on oil prices. When refinery inputs increase, it is usually bullish for crude oil prices.