Crude oil prices under more downward pressure

Soaring output from OPEC member Iraq has been a large contributor to that overhang, with production there doubling over the past decade to around 4.3 million barrels per day, more than enough to meet all of India’s daily demand.

U.S. shale oil production, the main driver of non-OPEC supply growth, is expected to fall for a ninth consecutive month in January, a forecast from the U.S. Energy Information Administration showed this week. In fact, Indonesia’s OPEC membership had come to an end in the year 2009 when its crude oil imports far exceeded its crude oil exports.

With over 31 million barrels per day (bpd) pumped in November, the Organization of the Petroleum Exporting Countries (OPEC) says its output volume for that month exceeded that of any month in the past three years. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.

Friday’s plunge is specifically blamed on a forecast by that the International Energy Agency that demand will remain low over most of the next year.

While there is possibility of oil price dropping to US$20 per barrel, an economist from MIDF Research said such a level was unlikely and it would instantly rebound after touching it. Stockpiles reached 190 million barrels in mid-this year, while it targets 550 million barrels by 2020. Non-OPEC supply will shrink by 380,000 barrels a day next year to average 57.14 million a day, with the USA accounting for about half of that contraction, it predicted.

The North American benchmark price has dropped 9% this week because of a glut on the world market. The combination of rising consumption and an expansion in storage facilities means the world won’t run out of space to store the surplus crude, the agency said. Iran’s plans to scale up production are also fueling pessimism in the global market. While oil prices have plummeted, with Brent crude falling below $40 a barrel, there are some encouraging signs in the public’s perception of price growth.

“The latest OPEC meeting, which concluded by essentially saying that it’s every producer for himself, actually presents a silver lining for the oil market”, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. Hewson said that in thin liquidity up to year-end there is a good chance that Brent will fall below its low since 2008 at around $38 per barrel. That possibility seems to be much more likely given recent updates in the market – pointing towards worsening fundamentals.