Crude Oil Prices Fell Sharply In Asian Trading, More Downside Is Limited

A stronger dollar makes dollar-traded oil more expensive for foreign buyers, a scenario that often causes prices to fall.

Olivier Jakob from the Switzerland-based Petromatrix said that the majority of the global demand increases will be met by non-OPEC supply over the next two years according to the IEA.

“Oil prices are caught in a range right now”. While that has assisted companies in repairing their damaged balance sheets, several forecasters have warned in recent years that a lack of new oil finds is at risk of putting the market into a state of undersupply. “And unless investments globally rebound sharply, a new period of price volatility looms on the horizon”. The Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) reported in late February that producers achieved 86% conformity with pledged cuts in January.

The price Venezuela receives for its mix of medium and heavy oil slipped slightly during the week ending March 3 as traders sifted through conflicting data on storage builds and await a second month of figures on compliance with an OPEC production cut that started in January.

Novak talked up his country’s industry, saying it now has a “good investment climate”, despite the last few years of low prices and Western sanctions. “A net demand gain of 7.3 [million barrels per day] is forecast [for] 2016-22-vastly exceeding the projected supply growth of under 6 mb/d”.

That growth will come mainly from the oilsands. In addition, lower economic growth from China and worries over Russian production also added to the decline in prices.

The oil glut in 2015 and 2016 had already shaken the global demand and the economy.

Hedge funds trimmed their net-long positions on WTI, or the difference between bets on a price increase and wagers on a decline, by 6.5 percent in the week ended February 28, U.S. Commodity Futures Trading Commission data show. However, he warned US supply will not be enough to meet demand this year and next. We do not see a peak in oil demand any time soon.

The Organization of the Petroleum Exporting Countries’ historic agreement with non-member producers to cut output by 1.8 million barrels a day to reduce oversupply has brought the cartel into greater alignment than ever before, he said at the IHS CERAWeek conference in Houston.