Oil prices continue sharp decline

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.

As one of the world’s leading crude producers, but not an OPEC member, Russia’s involvement in potential action to support prices has been the source of much speculation since prices started tumbling in the second half of 2014.

“Oil prices have fallen heavily again this morning as the commodity rout continues to dominate the week”, Hughes told AFP.

Oil prices are off dramatically since OPEC’s meeting last week, with Brent losing more than 8 percent.

OPEC’s report follows an acrimonious OPEC meeting on December 4, where it rolled over a policy of pumping crude to safeguard market share, despite oil prices LCOc1 that have more than halved to $40 a barrel in 18 months due to excess supply.

With the global economy struggling, China´s growth subdued and the dollar tipped to strengthen further, oil is expected to remain beaten down until possibly 2017.

A stronger dollar and expectations of a Federal Reserve rate hike have also hurt oil pirces.

With the lifting of worldwide sanctions, Iran can begin to reclaim its role as a major oil exporter – the U.S. Energy Information Administration says Iranian oil could boost global supply by about 100,000 barrels per day by the end of this year and 600,000 barrels per day by the end of 2016. Demand growth peaked at 2.2 million barrels a day in the third quarter, but there are preliminary signs that it has eased to 1.3 million barrels a day.

Demand is seen dwindling even as OPEC pumps oil at a furious pace, the IEA said. “There is unlikely to be any kind of “happy ending” for oil prices this year”.

The Medium Term Expenditure Framework and Fiscal Strategy Paper forwarded to the upper chamber by President Muhammadu Buhari decided the benchmark oil price for the year 2016 as $38 per barrel.

“The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter”, said Richard Gorry, director of consultancy JBC Energy Asia. No matter that Opec member Venezuela, reliant on oil for more than 90pc of its export revenue and enduring a 9pc GDP contraction this year, is on the brink of civil war.

And thus it has been a bad week for oil prices. OPEC thus feels threatened by the growing U.S. production and believes it might take over some of its market share.

“Concerns about reaching storage capacity limits appear to be overblown”, it said.

LONDON-Oil tumbled to fresh lows Friday, with the USA 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. WTI was 96¢, or 2.3%, lower at $35.80, hitting an intraday low at $35.67.

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