Moody’s slashes Brent assumption to $43 from $53

Oil rose again in choppy volatile trade on Tuesday, one day after rebounding sharply off seven-year lows, though worries that a global supply glut may stick around for longer than anticipated remained on investors’ minds. The rebound for crude-oil prices comes despite concerns that a climate deal in Paris may hurt long-term oil demand.

Of course, lower oil leads to lower gasoline prices, so not everyone is upset at the low price of oil.

“I have seen very high price and I have seen very low price too”. “Whether it can be maintained is another matter”. At the start of trading yesterday, West Texas Intermediate (WTI), the U.S. benchmark which trades within the range of the light sweet crudes produced in T&T, fell below US$35 a barrel, it lowest since February 18, 2009, during the global economic meltdown. “We feel a reasonable and responsible price will best serve the world economy”, Pradhan said. “In a few months or a year or so this will change”, he said. With low oil prices making several projects unviable, non-Opec production will decline by 400,000 barrels per day (20 million tonne a year) by 2016.

While lifting the ban would limit the size of the discount for USA oil, WTI would have to be at least $4 below Brent for exports to work, depending on the cost of shipping, Energy Aspects analysts wrote in a note on Friday.

Oil prices plunged last week since the Organisation of the Petroleum Exporting Countries (OPEC) on December 4 chose to keep crude production pumping at current level in the already over-supplied market.

Petroleum Minister Dharmendra Pradhan said that India has conveyed to OPEC “its need for reasonable and responsible pricing of oil and this is an ongoing dialogue”. The International Energy Agency added to the bearish sentiment last week by downgrading its global demand estimate for 2015 and suggesting an increase in inventory next year.

He also said that a cushion of US$5 to US$8 per barrel had been factored in for cover in the event of an oil price shock. Quoting the UK Telegraph’s Ambrose Evans-Pritchard, the SMH said that the cartel could be forced to call an emergency meeting “within weeks” if Saudi Arabia’s strategy for flooding the market creates a more severe crisis.

New supply will likely hit the market at some point early in 2016 as Iran an OPEC member ramps up its production once the sanctions have been lifted following its agreement from July on its controversial nuclear program.