Saudi-arabia-and-qatar-are-considering-venezuelars-proposal-for-an-equilibrium

Brent crude oil futures edged higher on Friday but were still trading near three-month lows as the pressure of a persistent supply glut weighed on prices.

Energy analysts say prices will be further pressured when Iranian oil returns to the market in the coming months, exacerbating oversupply woes. “Diesel is the most exposed from weaker growth, an economic rebalancing in China and the slowdown in global trade”, it said in a market commentary. A firmer dollar added to the weight on oil as commodities denominated in the greenback became less affordable to users of other currencies such as the euro.

Data from oil service company Baker Hughes released Friday showed that the number of active US oil-drilling lost 10 to 564 of this week.

According to the latest report from Bank of America Merrill Lynch (BAML), the increasingly fragile fiscal position of Bahrain amid the significantly low oil prices is likely to prompt a downgrade in its investment grade credit to “junk”.

BMI Research, part of the Fitch ratings agency, said: “What is under way now is a structural market rebalancing in which low oil prices clear out high cost production – a relatively small part of which is U.S. shale”. Saudi Arabia and Qatar are considering his country’s proposal for an equilibrium price at $88 a barrel, he said.

WTI briefly fell below US$40 in United States of America trade Thursday before recovering to close above that level.

The 19-commodity index, however, managed to settle just slightly lower after tracking oil’s steady finish, which came on the back of a pledge by Saudi Arabia to work toward crude price stability.

“There is a big drop in the production capacity of oil wells across the world, estimated around 4 million barrels a day, which means the petroleum industry needs new additional production capacity of around 5 million barrels a day every year…to meet the global demand”. There are still no signs from Saudi Arabia, Kuwait and the United Arab Emirates of any intention of reducing output.

Despite the perpetual appeals to reduce output and support crude prices, OPEC has been refusing to do so as the organization is trying to maintain its market share.

The upcoming year poses threats for oil producers because Iran’s sanctions would be lifted and global economy would witness boost in oil exports from Iran.

According to Del Pino, low oil prices would affect future oil investment.