Oil dips below $37 as OPEC pumps most in 3 years

But this time – most recently at a meeting in Vienna last Friday – it has opted to keep the taps open.

Despite the fall in USA inventories, the oversupply concerns remain as the Organization of the Petroleum Exporting Countries (OPEC) could not reach an agreement on production cuts.

Elsewhere in the report, OPEC downsized its non-OPEC 2016 output estimates to an average of 57.14 million bpd, due to declining USA shale-oil production: “This downward trend should accelerate in coming months, given various factors, mainly low oil prices and lower drilling activities”.

In November, OPEC production increased by 230,000 barrels per day compared to the previous month to average 31.70 million, according to secondary sources, OPEC said.

As of 11:45 AM EST today, WTI front-month futures were trading down by 65 basis points (bps) at $36.92 per barrel.

Prices have tumbled this month after OPEC failed to impose a ceiling on output.

Oil traders, however, chose to overlook the draw in crude stocks and focused on the big build numbers for distillate.

Mr Gorry said he expected a slow rebalancing of the market towards the end of next year, with production remaining stubbornly high despite low benchmark prices.

What seems to be more important is oil companies and those holding oil stocks are getting more convinced prices will be held down by OPEC and Saudi Arabia by even longer than in their worst nightmares.

Investors also digested a bullish report from the Energy Information Administration (EIA) on Wednesday, which said that US commercial crude inventories fell by 3.6 million barrels for the week ending on December 4.

Brent LCOc1 settled down 38 cents at $39.73 a barrel.

“There is evidence the Saudi-led strategy is starting to work”, the IEA said, referring to the producer group’s decision to maintain high output to safeguard market share.

OPEC members had explained that the increase in production rates accounted for Indonesia’s return to the group, with its 900,000 barrels per day. The cartel is now pumping out around 32 million barrels daily.

Demand growth will likely slow to 1.23 million bpd in 2016 from a five-year high of 1.79 million bpd in 2015 as support from sharply falling oil prices begins to fade.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $36.46 a barrel at 0241 GMT, down $0.30 in the Globex electronic session.