Crude oil prices expected to remain low

The primary reason for the sharp decline in the commodity happens to be the rising dollar. But after touching the low thirties in the December of the same year, the price rebounded steadily to around $100 a barrel, driven by the massive quantitative easing project undertaken worldwide. If oil supplies from OPEC and US shale reduce in the coming time and demand from countries like India (whose oil demand has already witnessed a 10 year high in September 2015 as per IEA) remain strong, the “3 billion barrel oil cushion” could deflate and this could make the oil prices head north. USA oil output has also held stable, around 9.2 million barrels a day, but down from a peak of 9.6 million barrels a day in April. He recently warned in Doha that the investment for future oil supplies will suffer if the “any price” scenario persists. Spot prices of the motor fuel loading from Singapore have fallen about 37 percent over the past year, compared with a slump of about 45 percent in Dubai crude, a benchmark for shipments to Asia. While increases in oil reserves can still hurt prices, there are far more positive catalysts for oil than there are negative. But when the tides turned and oil prices crashed, the Saudi government, which relies heavily on oil revenues (over three quarters of government income), refused to cut spending, ran into deficit and had to revert to using savings. The demand in October in the US was the highest in eight years.

The rebels within the OPEC ranks are gaining momentum, and Saudi Arabia, as the organization’s informal leader, will have a hard time to quell dissatisfaction among its fellow members.

But some said West Asian geopolitical risk was unlikely to push oil prices higher. So striking a balance could prove rather tricky.

Such a tactic, analysts say, has kept prices below $50 a barrel.

Just one month ago a report from OPEC stated that its members collectively produced 31.5 million barrels per day (in Sept.) and that volume represented the most since 2012. The country surpassed Saudi Arabia to become the largest exporter of crude oil to China in September and continues to look for ways to expand sales routes, including a visit to Japan this month by Igor Sechin, president of state-owned oil company Rosneft. ANZ said in a note on Friday that “U.S. stocks data did little to excite the market”, referring to numbers from the Energy Information Administration on Wednesday which showed USA crude inventories rose 1 million barrels last week, slightly below analyst expectations.

Barclays believes that USA shale was more reactive to oil price swings and was more capable of “adjusting” its production accordingly.

Ang said a report that durable goods orders in the United States, a barometer of the health of the world’s biggest economy, came in better than expected was also helping to perk up sentiment.