OPEC’s monthly roundup puts the boot into oil prices again

As crude oil prices dip to seven-year lows, it appears global oil markets will remain oversupplied at least until the end of 2016 as demand growth slows and OPEC output booms.

Soaring output from Organisation of the Petroleum Exporting Countries (Opec) member Iraq has been a large contributor to that glut, with production there doubling over the past decade to about 4.3-million barrels a day, more than enough to meet all of India’s daily demand.

Oil declined to its lowest level since 2008 as analysts warned that global oversupply will persist into 2016. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.

On the supply side, continued strong OPEC production and extra Iranian oil hitting the market next year will swell global inventories by 300 million barrels.

Non-OPEC supply is forecast to contract by 600,000 per day next year as US shale, the driver of non-OPEC growth, shifts into contraction, it said.

“The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter”, said Richard Gorry of JBC Energy Asia. There will be “further lay offs to come with oil at $40 a barrel”, he said.

When sanctions are lifted, that could rise by a million barrels a day, depending on whether global companies decide to return and invest there. Everybody is predicting that oil prices will decline to as low as 30 or even 25, but this is pure speculation just to gain more publicity or to be known as the one who forecasted low level of crude oil prices.

Brent, the global standard, fell $1.11 to $38.62 a barrel on the ICE Futures Europe.

Furthermore, early indicators for the current quarter were that growth in demand will ease to 1.3 m/bd from a year earlier after reaching a peak last quarter at 2.2 mb/d, the IEA added.

“As inventories continue to swell into 2016, there will still be a lot of oil weighing on the market”, said the Paris-based agency, which advises 29 nations on energy policy.

OPEC’s output was 31.695 million b/d in November, up 230,100 b/d from 31.465 million b/d the previous month, according to the latest OPEC report.

Goldman Sachs continues to believe that oil prices will remain low for longer as a result of OPEC’s decision to keep output steady.

China’s yuan has also fallen to its lowest in 4-1/2 years on concerns about the country’s slowing economy and expectations of a United States rate hike.

U.S. oil and shale gas production has been expanding in recent years, and with reduced domestic fuel demand this could lead to less reliance on crude imports and a lifting of its oil export ban.