Oil prices rise following drop in USA crude inventories

Oil prices continued their slide on Thursday, with a barrel of the North American crude benchmark known as West Texas Intermediate changing hands down 20 cents at $36.90 per barrel. That was the lowest settlement price for a most-active futures contract since February 2009 and prices have now fallen for five sessions in a row.

Brent crude closed on Wednesday down 15 cents at $40.11 a barrel, after hitting a near seven-year low at $39.57.

Record production in Iraq and higher supplies from Kuwait sent OPEC’s output to 31.73 mb/d in November it said.

“U.S. tight oil production, the main driver of non-OPEC supply growth, has been declining since April”, OPEC said in the report.

The report is OPEC’s first since it abandoned its production target of 30 million barrels a day at its meeting last week and doubled down on its decision past year to pump aggressively in the face of falling oil prices.

OPEC increased its crude output to its highest level in over three years as it pushed forward with its strategy of protecting its market share and pressuring competing producers.

After yesterday’s recovery in the Brent price, it again came under renewed pressure during the time of trading, today morning it finds itself at a new 7-year low at $39.5 per barrel.

The cartel, which once regulated its supply to control global oil-price levels, now finds itself scrambling for customers. At the start of the year, production from countries outside the cartel was rising by 2.2 million barrels a day.

USA gasoline futures were the only bright spot on the petroleum complex, rallying on concerns over a refinery outage and possible cuts in production. Members can pump as much as they please, despite a global surplus, Iran’s Oil Minister Bijan Namdar Zanganeh said after the conference. “I think 2016 will be a year where we will have a lower price environment”, he told The Globe and Mail on the sidelines of the Paris climate summit.

Just as global oil demand growth was showing signs of a slowdown, the global oil supply inched up in November, according to the IEA, to reach 96.9 mb/d “on slightly higher OPEC crude output”.