Crude oil prices edge up

“Prices might fully recover by next year”, said Mamdooh Salama, a consultant at the World Bank in Washington, DC.

The Opec oil producing cartel, of which Saudi Arabia is a key member, decided against cutting production targets previous year, letting the price fall from around $US100 to less than $US50.

“If Opec members reduce production, the gap will be filled in by non-Opec producers…These are the countries that have always refused to cooperate with Opec members”, he stressed.

Blame has been laid at shale oil’s door, because oil prices were set at $110 a barrel in September 2014 and a year later have plummeted to around $40. He said that looking at global commodity prices, one sees that they have been on a downslide whether it is gold or copper or a few metal.

“As a responsible and reliable producer with a long-term horizon, the kingdom is committed to continue to invest in its oil and gas sector, despite the drop in the oil price”, Prince Abdulaziz said. “But no one is asking why there is suddenly this economic slowdown in China”, he said. Analysts said that oversupply would continue to pressure oil markets. The demand and supply situation is largely influenced by geopolitical factors, they said.

Even as upstream producers adjust to oil’s new economics, a bigger game-changer could be their growing pivot toward natural gas, which was evident at a climate change forum in Paris mid-October. Opec made a decision to keep its production levels unchanged in November 2014.

Oil demand is expected to be 94 million barrels a day this year, rising 1.5 per centfrom last year, with about 2 million barrels a day of spare capacity, mainly held in Saudi Arabia, he said in the prepared remarks. In the first half of 2014, exports, dominated by hydrocarbons, were the single largest component of demand, accounting for 73.3% of GDP.

Russian Federation is ready to compete for global market share, whether OPEC redistributes any extra crude output from Iran within the organization’s current 30 million b/d ceiling or raises total output, energy minister Alexander Novak told the country’s state television.

“We knew that it was going to be painful but the extent of the pain went beyond our expectations”, Falih said in the Financial Times interview. He said it was wrong to think that low crude rates would discourage shale oil producers due to higher cost of exploration. Beyond 2016, the fall in non-OPEC supply is likely to accelerate, as the cancellation and postponement of projects will start feeding into future supplies, and the impact of previous record investments on oil output starts to fade away.