Oil Prices At Seven-Year Low

In its latest monthly oil market report, Opec said low prices will drive strong global demand in 2016, which is estimated to be around 94.13 million bpd, up 1.25 million bpd from this year’s 92.88 million bpd, that was an increase of 1.53 million bpd over last year.

US crude futures were at $36.67 per barrel at 0029 GMT, down 9 cents from their last settlement, and only slightly above 2009 lows of $36.38 reached on Thursday.

LONDON-Oil tumbled to fresh lows Friday, with the US benchmark price slipping below $36 a barrel after a top energy watchdog said low prices are taking a toll on supply but that isn’t yet enough to relieve the global crude glut. Members of IEA, such as the U.S., are obligated to keep at least 90 days of import coverage.

Prices are falling for a sixth day, the longest losing streak in nearly nine months, since the Organization of Petroleum Exporting Countries chose not to curb output at its December 4 meeting.

The group is battling for market share with other oil producers including the United States and last Friday decided against cutting output despite plunging prices, weak global demand and the supply glut. In 2016, demand forecasts for Opec crude remains unchanged at 30.8 million barrels a day, an increase of 1.5 million barrels over the current year.

Non-OPEC supply is forecast to contract by 600,000 per day next year as USA shale, the driver of non-OPEC growth, shifts into contraction, it said. With 95 percent of its income from oil, Venezuela is witnessing its worst recession since the 1940s, and the economy is expected to shrink by 10 percent this year.

January diesel futures fell 7.95 cents, or 6.5 per cent, to $US1.1456 a gallon, the lowest close since March 2009. Several of the oil cartel’s members, notably Iran and Iraq, are looking to boost output as they emerge from sanctions and conflicts.

But it added that the pace of record global stock-building would slow down next year and the world was very unlikely to run out of storage capacity.

In US economic data today, retail sales, producer prices, and the University of Michigan’s consumer confidence survey are all due. These two factors will set the stage for prices to spike above $80 within the next few years strictly based on the supply and demand imbalance beginning in the second half of 2016.

“The majority of investors still feel there will be an interest-rate rise next week, and that has always been a detriment to gold, because it strengthens the U.S. dollar, which is what gold is priced in”, James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview.

Brent futures declined as much as 2.1 per cent for a sixth consecutive loss.