Oil prices climb as OPEC eyes demand recovery

Hope of seeing a rebound of oil price from its current low level may not materialise soon, as the Organisation of the Petroleum Exporting Countries, OPEC, has predicted that the price will not rise until 2017.

In its month-to-month report, OPEC estimated the worldwide requirement to be 30.82 million barrels each day (bpd) from this group of nations, which is higher by 510,000 bpd from its prior estimate.

The bank, however, added that “a rapid drawdown of the observed backlog of uncompleted wells could lead to higher production later this year and in 2016”. But according to preliminary Opec figures, that growth had dropped to just 420,000 bpd in the third quarter of this year, with shale oil (or tight oil) producers particularly hit. A few OPEC members (Saudi Arabia, Kuwait, UAE) may be able to live with lower prices longer than other OPEC members (Venezuela, Nigeria), but in the staring contest the cartel is playing with USA producers, neither side has blinked yet, even though US rig counts have fallen through the floor. “All of us should work together, OPEC and non-OPEC, all of us have to work together to see how we can get rid of this 200 million barrel overhang”, Badri said. Badri himself declined to be drawn on what OPEC oil ministers would decide.

Despite the recent uptick, oil prices remain depressed owing to concerns about demand as the global economy stutters, a supply glut and the weakness in China.

The Saudis were pumping out a record high 10.56 million barrels per day in June, 2015.

Brent for November settlement climbed as much as 64 cents, or 1.3 percent, to $50.50 a barrel on the London-based ICE Futures Europe exchange. “The minimum, minimum price should be $70”, said Maduro during his weekly program broadcast on state television.

“This should reduce the excess supply in the market … resulting in more balanced oil market fundamentals”, OPEC said in its report.

OPEC has invited non-OPEC countries to attend a technical meeting on October 21 at its Vienna headquarters, to discuss the market, Badri told reporters, following on from a similar meeting held in May.

“Smaller operators active in tight oil have been particularly affected by low prices, as they are usually pressed for cash”, Opec reports.