Oil wars: OPEC keeps pumping as prices plunge

“Given the better-than-expected growth in global oil demand so far this year, together with some signs of a pickup in the economies of the major consuming countries, crude oil demand in the coming months should continue to improve and, thus, gradually reduce the imbalance in oil supply-demand fundamentals”, OPEC noted in its latest report.

Oxu.Az reports with reference to TASS that the statement is contained in the August report of the organization.

Non-OPEC oil supply is expected to grow by 960,000 barrels in 2015, following an upward revision of 900,000 barrels, due to higher-than-expected output from non-OPEC producers mainly outside of North America.

But OPEC, which has traditionally defended price levels by cutting output when necessary, dramatically switched strategy last November when it opted to leave its production target unchanged.

Crude oil futures jumped nearly 4% yesterday, moving away from January-lows, as speculative traders increased their net-long positions, but prices slumped again today morning and remain over a quarter below their most recent peaks in May.

Currently, Iran’s crude oil production is estimated to be 2.7 million barrels per day. Increased estimates for U.S. production bolstered this year’s outlook, it said.

In July, OPEC posted the highest crude supply in more than three years, despite the global surplus.

“Devaluation of the yuan means a stronger U.S. dollar and that’s likely to weigh on commodity prices”, Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. In the 12 months to the end of April, the value of contracts awarded for oil and natural-gas investment projects in the Middle East fell by $93 billion-a 53% contraction from the preceding year, according to United Kingdom consultancy Wood Mackenzie. “They want market share”, he said.

Brent crude oil prices dropped more than 2 percent in early Tuesday trading to $49.23, moving back below the threshold price of $50 per barrel.

Saudi Arabia produced 10.56 million barrels a day in June, and July production is unlikely to be lower.

Earlier, Algerian Energy Minister Salah Khebri was reported by state news agency APS as saying discussions about holding such a meeting were ongoing. The price rout adds pressure to Riyadh’s budget, strained by higher spending as it seeks to stave off unrest at home and intervenes militarily in neighboring Yemen.

A spokesman for the Saudi Arabia ministry of finance referred calls to the country’s central bank, where no one was available to respond.