Moody’s cuts oil price forecasts for 2016

Non-OPEC annual supply growth shrank to below 300,000 bpd in November from 2.2 million bpd at the start of the year, according to the International Energy Agency (IEA).

The overwhelmingly bearish sentiment that has pushed oil from above $115 per barrel last June returned to the fore as fresh evidence emerged that low prices are doing nothing to ease heavy oversupply.

Brent and USA crude’s West Texas Intermediate futures rose more than $1 a barrel, up for the second straight day after oil bears failed to push prices below a seven-year trough.

This time, the oil cartel has decided not to cut back on production, and instead allow prices to drift lower in hopes of gaining market share while driving out US competition.

“Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi Arabia”, Morgan Stanley analysts said in a research note Monday, adding that OPEC’s supply is likely to increase by a million barrels per day next year.

“Prices are likely to remain under pressure as the market will be closely watching the Federal Reserve’s policy-making this week”, said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services organization EY.

Opec countries have been producing oil at near record levels since previous year in an attempt to drive higher-cost producers such as USA shale firms out of the market.

Brent crude, the global benchmark, had risen 55 cents (U.S.) to $38.47 a barrel by 1253 GMT, having touched an intra-day high of $38.95.

World oil prices tumbled again Monday, dropping to lows not seen since late 2008 and early 2009, when the global recession was deepening.

“Unwinds of oil ETF holdings could exacerbate any leg lower in prices particularly as ETF net length remains highly stretched on the long side”.

OPEC Secretary-General Abdullah al-Badri said on Tuesday that crude oil prices will not continue at multi-year lows and could swing upwards in as little as a year.

Less affluent OPEC states like Algeria, Angola, Nigeria and Venezuela, have been calling for production cuts in order to increase crude prices.

Oil rebounded by 1% on Tuesday, halting a slide to 11-year lows, but traders said they expected no more than fleeting support for crude in an oversupplied market and ahead of a forecast USA rate hike that could send the dollar rallying.