Oil prices bounce back but gains limited

The UAE will have that 3.5 million barrel production in the “next two to three years”, said Abdulla Nasser al-Suwaidi, the director-general of the Abu Dhabi National Oil Co.

Saudi Arabia is the biggest oil producer within the 12-member Organization of the Petroleum Exporting Countries (OPEC), which will holds its next output gathering in Vienna on December 4. Moreover, the prices that Iran is offering on the grade of crude does not make sense for us to import higher quantity.

Saudi Arabia isn’t immune from the pain of low oil prices. But attention now seems to have turned to what Chinese demand will look like once the storages have been filled. Russia, the world’s largest oil producer, has stated desire to discuss the oil prices with OPEC, which could contribute to the upward slant of the prices in the short run.

Almost a year after the Saudi-led decision to defend market share rather than prices, OPEC looks set to stick to its current policy at its December 4 meeting. In November, 2014, Russian Federation refused to cooperate with OPEC and cut its output quota in order to boost the prices.

Hamza Khan, commodities analyst at ING Bank in the Netherlands, said any upside for oil is limited as oil producers around the world struggle to sell a surplus.

The country’s largest oil marketing company Indian Oil Corporation is not keen to increase oil imports from the Islamic country unless Iranian oil companies offer huge discounts under renegotiated deals.

The initiative includes efforts by the companies to reduce greehouse gas emissions through efficiency in their own operations and at the end-user level of their products, development of renewables, technological solutions to cut emissions, and carbon capture and storage schemes.

Meanwhile, the Saudi Arabian Oil Company chairman Khalid al-Falid told the Financial Times that the company had no plan to cut oil production even after a slump in prices over the past year.

“With few signs of change in the short-term supply and demand fundamentals, crude oil prices are likely to remain range-bound in the coming weeks”, Gupta said. Could such a tectonic shift mean oil prices not just lower for longer but lower forever?