Energy agency: Global oil supply jumps, sending prices lower

15 November, 2018, 18:55 | Author: Gerard Cortez
  • Will Gas Prices Go Up? Saudi Arabia to Cut Production

Oil has tumbled to its lowest price in a year as concerns mounted about rising output and slowing global demand.

United States crude futures settled down US$4.24 a barrel, or 7.1 per cent, to US$55.69 a barrel.

Oil prices rose on Wednesday, ending the longest ever losing streak for USA crude, on the growing prospect of OPEC and allied producers cutting output at a meeting next month. Trump posted a tweet on Monday meant to put pressure on OPEC, calling for no supply cuts to prop up prices.

Both benchmarks have fallen more than 20 per cent since peaking at four-year highs in early October. Hedge funds and other money managers have reduced their long position in oil contracts to their lowest since August of 2017 last week.

"Although the oil market has reached a balance now, the forecasts for 2019 for non-OPEC supply growth indicate higher volumes outpacing the expansion in world oil demand, leading to widening excess supply in the market", OPEC said in the report.

"OPEC lowered its demand forecast, and that gives them cover for cutting production", said Phil Flynn, analyst at Price Futures Group in Chicago.

Anxious by a drop in oil prices and rising supplies, OPEC is talking again of reducing production just months after increasing it.

Global benchmark Brent crude oil futures were down 9 cents at.38 per barrel.

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The slump in spot prices has turned the entire forward curve for crude oil upside down.

Saudi Energy Minister Khalid al-Falih said on Monday that Opec agreed there was a need to cut oil supply next year by around one million barrels per day from October levels to prevent oversupply.

Also, the former President, International Association of Energy Economist ( IAEA), Prof Adeola Akinnisibu, said many barrels of Iranian crude would still get to the market, as long as the USA allows some countries to buy the product.

At 10.1 million barrels daily, gasoline production last week was considerably higher than the 9.7 million bpd booked a week earlier.

"The situation as it is now, at around $70 (per barrel), suits us completely", Putin said at a summit in Singapore.

Opec is meeting on December 6 and is expected to decide then whether to carry on the production cuts. Oil is priced in dollars and the US currency has been strong of late.

Oil has retreated from a four-high reached in early October as fears of a supply glut deepened after the USA gave some nations waivers from its sanctions to continue buying Iranian crude while American output and inventories climbed.

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