OPEC Crude Production Reaches High of Three Years

This is the latest confirmation that OPEC is resolute in its fight to maintain market share, and try and squeeze smaller competitors out of the market.

The organisation also predicted supply from non-Opec members was likely to fall faster in 2016 than previously estimated, having grown faster than forecast this year.

After a marathon session last week, Opec dumped its earlier production target of 30 million bpd and decided continue its policy of not constraining output.

Analysts are blaming rising oil production, largely by OPEC member states, for the falling prices. They reached a peak of $108 per barrel in June 2014.

“For 2016, global oil demand growth is expected to increase by around 1.25 mb/d, unchanged from the previous report, averaging 94.13 mb/d”, OPEC said.

Brent for January settlement slid as much as 35 cents, or 0.9 per cent, to US$39.38 a barrel on the London-based ICE Futures Europe exchange.

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.

Crude prices have been barreling toward Great Recession-era lows since the Organization of Petroleum Exporting Countries’ gathering in Vienna last week, when the cartel made a decision to scrap its longstanding output ceiling.

BMI, a subsidiary of rating agency Fitch Group, said it saw “a soft recovery from 2017”, but an ongoing supply surplus in the market would keep oil prices range-bound in the mid-50s until 2018.

However, it said the record global stock-building pace would slow down in 2016.

There were signs of more demand from China, the world’s second-biggest oil user. “As companies make further spending cuts in reaction to sub-$50/bbl oil, the impact on supplies – both from non-OPEC and OPEC – will be even more pronounced in the longer term”, it said.

Crude oil prices extended their slide on Thursday to near seven-year lows as traders looked beyond a drop in USA crude stockpiles to focus on a global supply glut, while a stronger dollar weighed on commodities.

The IEA projected that the rate of growth in global demand for crude would slow to 1.2m barrels per day in 2016 from the 1.8 mb/d rise seen this year.