Oil Prices Fall On Supply Worries, Profit-Taking

A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC producers maintain near-record output, the worldwide Energy Agency said on Tuesday, even as low prices curb supply outside OPEC.

Oil prices might have bottomed in August 2015 and would now be in the starting blocks hovering around $50 per barrel for the WTI with as main target the end of the strong bearish trend started in summer 2014 when that same barrel was worth more than $100.

OPEC last November decided against propping up prices by cutting output, seeking to recover market share taken by higher-cost rival production.

“Total non-OPEC output next year is expected to contract by almost 0.5 million bpd as global upstream spending cuts of more than 20 percent impact both new projects and existing production”, the IEA said.

The Organization of the Petroleum Exporting Countries meets to review its output policy on December. 4 and the comments add to signs the group is unlikely to be diverted from its strategy.

OPEC Secretary-General Abdullah Al Badri, also speaking in Kuwait City, was similarly upbeat on the market outlook. “In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand”, he said.

The US dollar .DXY hit three-week lows against the euro as minutes from the Federal Reserve’s September policy meeting showed the Fed in no rush to raise interest rates.

Omair, also Minister of State for National Assembly Affairs and Chairman of KPC, said the oil and gas industry around the globe was keen on absorbing impact of declining oil prices, especially with the emergence of other lucrative energy resources. The OPEC chief said market fundamentals did not support the sharp drop in oil prices which have fallen by nearly 60 percent since June 2014.

A technical meeting of oil experts from OPEC and non-OPEC countries later this month will discuss a proposal by Venezuela to introduce a price band for oil, Kuwait’s oil minister said on Tuesday.