Oil up after U.S. storage slips, global glut concerns remain

Brent futures are down more than 11 percent this month and, having dipped below $40 per barrel, there are renewed expectations it might test 2008’s low around $36.

OPEC production rose to 31.73 million barrels a day in November, according to the IEA, more than 400,000 barrels a day above the IEA’s estimate of 31.3 million barrels for the 2016 “call” on OPEC production.

Oil prices edged up in Asia today following signs of a slight improvement in U.S. demand but concerns that an oversupply will persist past next year kept the commodity struggling at multi-year lows.

Brent crude futures for January, the global benchmark, fell US$1.80 (4.5 per cent) to US$37.93 a barrel in London, a level last seen amid the 2008 global financial crisis. Neither EconoTimes nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.

“Upending year-earlier forecasts that Chinese gasoline demand would struggle in 2015, confirmed data for the first ten months of the year show growth of roughly 10.4 percent year-on-year” the International Energy Agency said in its monthly oil report.

After the “tremendous” growth of 2.23 million barrels per day last year, the group now expects growth this year to have been a “much slower” 1 million – but up from its previous projection of 280,000 barrels.

The agency admits the Saudi-led policy of dumping oil and cutting prices seems to be working, taking a toll on non-OPEC supply.

In its monthly oil market report, the IEA also said the world’s “unrelenting oversupply” of oil is expected to grow.

Futures of Brent and US crude’s West Texas Intermediate struck February 2009 lows for a fourth day in a row in continued fallout from an OPEC meeting last week that abandoned price support measures. Meanwhile, oil output in the United States, a strong competitor of OPEC, could continue to decline in 2016 possibly causing oil prices to rise in the second half of that year, he stated. OPEC’s daily output has eclipsed its production ceiling of 30 million barrels per day by at least 1 million for the majority of the year.