Oil edges higher after United States storage slips, global glut concerns remain

USA crude futures were down 45 cents at $36.71 per barrel, having touched a low of $36.52, a trough since February 2009.

Production in Saudi Arabia slipped by 25,200 barrels a day to 10.13 million a day in November, OPEC’s report showed.

However, Sanjeev Gupta, who heads the Asia Pacific oil and gas practice at professional services firm EY, said: “The market remains weak overall due to global oversupply, compounded by the OPEC’s decision to leave its production quota unchanged”.

“There is evidence the Saudi-led strategy is beginning to work”, said the IEA, adding that it expects non-OPEC supplies to drop by 600,000 barrels per day next year owing to a drop in oil production from North American shale rock.

This, along with signs of dipping US production, lent prices some support.

The report didn’t make any reference to how OPEC’s data will re-incorporate output from Indonesia, which rejoined the organization on December 4 after an absence of seven years. Opec supplies were 200,000 barrels a day higher in November over October, and non-Opec output 280,000 barrels higher.

Domestic crude on Friday tumbled below $36 a barrel after the International Energy Agency said global demand growth – propelled by motorists in the United States, China and India this year – is set to slow by a third in 2016. They reached a peak of $108 per barrel in June 2014.

Oil prices crept higher Wednesday but still struggled near multi-year lows as analysts warned the weakness will continue past next year. While its policy is hitting rivals, triggering the steepest drop in non-Opec supply since 1992, world oil inventories will most likely swell further once Iran restores exports on the completion of a deal to lift sanctions, it said.

However, this time – most recently at a meeting in Vienna on Friday last week – it has opted to keep the taps open.

Demand for OPEC crude in 2015 is estimated to stand at 29.4 mb/d, an increase of 0.4 mb/d over a year ago and representing a downward revision of 0.2 mb/d compared to the previous report.