Oil price drops further on forecast of weaker demand

OPEC failed to agree on an official output quota last week, leaving production near record highs despite the massive global glut that is keeping oil prices low.

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.

However there was also fresh evidence of market oversupply.

US gasoline jumped more than 3 percent after reports that BP’s 405,000-bpd Whiting catalytic reformer unit was shut on Wednesday at just before midnight NY time.

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.

Non-OPEC supply is forecast to contract by 600,000 a day next year as US shale, the driver of non-OPEC growth, shifts into contraction, it said.

It said its group output rose by 230,000 bpd in November to 31.7 million bpd. The U.S. West Texas Intermediate (WTI) crude finished the session down 35 cents at $37.16.

“Lower prices are clearly taking a toll on non-OPEC supply with annual growth shrinking below 0.3 million barrels a day in November from 2.2 million barrels a day at the start of the year”, the IEA said.

It (Other OTC: ITGL – news) held steady its forecast of increased demand of 1.2 mbd next year to 95.8 mbd, pointing to the first signs in a slowdown in demand. ― File picSEOUL, Dec 11 ― Oil headed for the biggest weekly decline since March amid speculation OPEC’s decision to effectively scrap production targets will keep the market oversupplied.

OIL PRICES settled lower on Wednesday after traders and investors ignored an unexpected drawdown in US crude stockpiles to focus on a build in distillates, including diesel, that came in twice more than expected. In addition to that, Iran’s plans to ramp up production once the trade sanctions were lifted was reflected in the decided 31.5 million barrels a day production ceiling.

The price rout is a result of a huge overhang in production that is fast filling onshore storage sites, which some analysts expect to run out in early 2016.

Global oil supply, too, was unrelenting, hitting almost 96 million barrels per day.

Commercial oil stocks in the world’s major economies will continue to grow in 2016, albeit much more slowly, the rich-world’s oil watchdog said in a closely watched report, adding to the selling pressure on oil futures.