WTI Futures On Pace for 31% Yearly Loss; Brent 36% Yearly Loss

Mehdi Assali, the director of affairs Organization of Petroleum Exporting Country affairs at the Iranian Oil Ministry, said that, with production costs of around $10 per barrel, Iran stands in a unique position. While U.S. output is down from an April peak, production has fallen more slowly in response to low prices than many investors expected.

“The oil prices in the next year (2016) will fluctuate between $35 to $50, so Iran is not anxious about a fall of its oil income”, Mehdi Asali said, Reuters reported. Prices have decreased 30% this year.

Goldman Sachs has said prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

The U.S. benchmark fell Thursday, recently trading down 14 cents, or 0.4%, to $36.46 a barrel on the New York Mercantile Exchange.

“At a time when USA shale is facing headwinds due to the collapse in crude oil prices…”

Saudi Arabia and its Gulf allies the UAE and Kuwait have said they are counting on global demand growth to help rebalance the market over the course of 2016.

One change in oil trading has been that WTI flipped to a premium versus Brent this month after the United States lifted a decades-old ban on exporting USA crude oil. Nymex and Brent prices have fallen 31% and 36%, respectively, this year and many analysts are predicting a “lower for longer” scenario. But supply began to outpace demand as China’s economy slowed.

Rising oil inventories are another sign that the oversupply, which has battered the market for more than a year, is continuing unabated.

The immediate outlook for oil prices remains bleak.

The DoE s announcement last week of an unexpected fall in USA commercial crude stockpiles, by 5.9 million barrels, briefly had pushed prices higher.

The market has been highly volatile during the holiday-shortened final week of 2015 and remained near multi-year lows in the face of indications a supply glut will continue into 2016.

The downturn in oil has caused pain across the energy supply chain, including to shippers, private oil drillers and oil-dependent countries from Venezuela and Russian Federation to the Middle East. Analysts polled by Reuters had expected a draw of 2.5 million barrels.

“Most likely, production would disappoint us and remain above 9.1m barrels/day”, he added.

Iraqi production rose by 119,000 barrels a day to 4.44 million this month, according to the survey.