Oil prices fall due to new oversupply concerns

For the time being, the lack of agreement effectively suspends the ceiling on Opec production, and the cartel will wait until the next meeting to confirm its output target. In August, Gulf delegates were hoping for oil at $60 a barrel by this month.

Russian officials have said in the past that low oil prices should squeeze out high-cost production such as USA shale oil, effectively reducing the level of global oversupply.

The overwhelmingly bearish sentiment that has pushed Brent from above $115 per barrel last June returned to the fore as fresh evidence emerged that low prices are doing nothing to ease heavy oversupply. The Opec member “appears to be returning to the market a lot sooner than had been forecast”, he said. However, US producers could benefit when the spread between Brent and WTI crude oil prices widens over the long term. It hardly came as a surprise after OPEC oil ministers effectively dropped any reference to the group’s production limits (previously standing at 30 million barrels per day) for the first time in decades at its meeting on December 4.

Also looming large for oil market investors is the likely increase in US interest rates after the Federal Reserve meets Tuesday and Wednesday.

Oil prices also retreated on signs Iran may be moving closer to boosting crude sales as United Nations nuclear monitors ended their 12-year probe of the country’s research into atomic-weapon technologies. I saw six cycles – I saw very high price, I saw low price, and this is one of them. “This will not continue”, Badri said.

Mads Koefoed, of Saxo, reckons emerging markets equities could climb by as much as 25pc in 2016. “When will they be able to pump more”, this source said, adding that he sees prices rising to the range of $50s a barrel by 2017.

The price gap between the two benchmarks has narrowed to the smallest level in years, signaling that the US oil market is likely to grow tighter following Congress’ decision to lift the ban on domestic oil exports, while a global glut gets worse.

“First of all, our policy calls for maintaining production at 525-530 million tonnes (a year), according to our energy strategy”, Novak told Rossiya-1 TV station, giving output figures equivalent to 10.5-10.6 million barrels per day (bpd). “So the net effect of export from American oil on the market is zero”.

To make things worse, Amir Hossein Zamaninia, the Iranian Deputy Oil Minister for worldwide and Commerce Affairs, said there’s “absolutely no chance” his country will delay plans to increase shipments even if crude prices drop.