Global oil glut to persist in 2016 – IEA

The price of Brent crude oil fell below $39 a barrel at one point, its lowest since December 2008. Republication or redistribution of content provided by EconoTimes is expressly prohibited without the prior written consent of EconoTimes, except for personal and non-commercial use.

USA crude futures fell sharply on Friday plunging below $36 a barrel for the first time in more than seven years, after a bearish report from the International Energy Agency projected that global energy markets will remain vastly oversupplied for at least the immediate near future.

Early indicators for the fourth quarter of 2015 show growth easing to 1.3 mb/d year-on-year from a third quarter peak of 2.2 mb/d, the IEA noted.

While Novak did not take part in that OPEC meeting in Vienna, Russia is expected to take part in the next expert-level meeting between OPEC and some non-OPEC producers on global oil markets on Tuesday.

Saudi Arabia, the world’s largest crude exporter, produced 10.13 million bpd, about 25,200 bpd lower than in October.

Continued strong OPEC production and extra Iranian oil hitting the market next year will swell global inventories by 300 million barrels. Exxon Mobil Corp., the world’s biggest oil company, has lost $11 billion of its value and PetroChina Co. more than $17 billion, according to data compiled by Bloomberg.

“This devaluation that we have been seeing by the Chinese since August has been a key part in delaying any major decisions from the Federal Reserve and ultimately I think they are attempting to get ahead of the curve by devaluing their currency as the USA dollar continues to strengthen”, explains Kelly. That comes at a time when the world’s economic growth is slowing, blunting demand for raw materials. “Lower prices are clearly taking a toll on non-OPEC supply, with annual growth shrinking”.

J.P. Morgansaid that despite the supply adjustment already under way in the shale industry, oil markets look to start 2016 on a weak note. USA crude production leads the charge lower on this front, falling by 415,000 bpd.

BP’s share price slid 3.2 percent to 339.80 pence and Shell’s “B” shares dropped 4 percent to 1,498 pence and Anglo American shed 7 percent in a London session which saw just two FTSE 100 firms in positive territory.

Nonetheless, the IEA noted that despite the price drop and slowing demand growth, OPEC crude output edged 50,000 barrels a day higher in November to 31.73 mb/d “with record production from Iraq and higher supply from Kuwait offsetting losses from African members”.

Jefferies bank said that an “inventory overhang is likely to expand significantly through the first half of 2016 and will likely suppress oil prices in the near-term”.

Opec’s demand this year is around 29.4 million bpd, lower than its current output.