UAE energy minister: Oil market will “stabilise in 2016”

At a meeting in Vienna on Friday, the Organization of the Petroleum Exporting Countries decided against cutting its oil output to lift prices, its president and Nigerian oil minister Emmanuel Ibe Kachikwu said. Instead, the organization’s endorsement of present output, which is more than 1.5 million barrels a day above the formal ceiling of 30 million barrels, is likely to push the price of oil down further. Prices declined 1.9 percent to $39.23 at 12:23 p.m. London time.

Barclays said that OPEC faced an “impossible trinity of achieving higher market share, higher prices and higher demand through a nominal target which members continue to breach”. “Our call on crude, for instance, is that the average price in 2016 will be lower than that in 2015 and we are factoring in that our growth outlook may be lower by $2 to $3 a barrel on an average basis”.

For the public, this represents excellent news, but more oil and lower prices isn’t necessarily good news, as the limited resources that we already have are bound to be finished up faster in this manner.

“The oil market anticipated Opec’s decision, and the countries with an excess of supply are responsible for the consequences”, Bijan Zanganeh was quoted as saying by Iran’s Shana news agency.

Wednesday marked one of the week’s worst days for crude oil futures, as a strong US dollar, inventory data from the US Energy Information Administration (EIA), and speculation of OPEC keeping its production rates constant, weighed on the commodity future.

For while much has been made of the “breakeven” cost of oil production over the a year ago, it is the “cash cost” which determines the actual floor for oil producers.

Under a three-year economic plan approved by the cabinet, government expenditure will rise to 6 trillion naira ($30 billion), Budget and Planning Minister Udoma Udo Udoma told reporters on Monday in the capital, Abuja.

WTI (West Texas Intermediate) crude oil futures contracts for January delivery fell by 4.7% and closed at $39.97 per barrel during the first week of December 2015. Natural gas prices also fell. Benchmark U.S. crude is trading near its low for the year following a decision by OPEC last week not to cut production. Prices fell 4.2 per cent last week.

While lower prices eat into the revenues of the oil cartel s members, cheap crude may result in lower production from non-OPEC nations – helping countries like Saudi Arabia preserve their market share. He saw a drop of oil prices to $20 per barrel from the recent $44 per barrel.