Published: Mon, February 15, 2016
Business | By Max Garcia

OPEC crude productivity raised in spite of low oil price

Crude prices plunged Thursday as market expected the supply to surpass the demand. Opec left its 2016 global oil demand growth forecast little changed, predicting demand would rise by 1.25 million bpd, marking a slowdown from 1.54 million bpd in 2015. Market intelligence firm Genscape reported the Cushing, Oklahoma delivery hub for U.S, crude futures saw a build of almost 425,000 barrels in the week to Feb. 9.

But "the market took the view...that the decline in United States crude-oil stockpiles would be temporary and this kept downward pressure on prices overnight", said an ANZ Bank report.

The weak euro added to volatility in oil, as did stronger equity markets after Federal Reserve Chair Janet Yellen's remarks that conditions in the United States allowed for "gradual" rate hikes.

The Minister also said that they have focussed their attention towards a number of important facts and held several rounds of discussion to create the price formula. The implication of the stockpile essentially means to supply outweighs demand, hence, a drop in price of oil.

Global oil production by OPEC countries increased by 280,000 barrels a day, last month, to 32.63 million, the IEA said. Total motor gasoline inventories also increased by 1.3 million barrels last week, extending gains from the previous four weeks.

US West Texas Intermediate (WTI) crude futures were at $27.05 per barrel at 10.30am UAE time, down 40 cents and within a dollar of the $26.19 a barrel intra-day low hit in January that was the lowest since 2003. That is contrary to the 2.4 million-barrel increase reported by the American Petroleum Institute late Tuesday and analysts polled by Platts expected a rise of 3.2 million barrels for the week.

On the Intercontinental Exchange (ICE), Brent crude for April delivery wavered between $29.93 and $31.11 a barrel, before closing at $29.98, down 0.86 or 2.83% on the session.

OPEC producer Iran has cut its Heavy crude price for export to the Mediterranean by a larger amount compared with top exporter Saudi Arabia as Tehran seeks to attract more buyers after sanctions were lifted.


Patrick DeHaan, a senior petroleum analyst at Gas Buddy dot com, said OPEC still appears to be the driving force behind the low oil prices. In it, the EIA lowered estimates from the month prior's report for the average 2016 Brent spot price (from $41/bbl to $38/bbl), and for WTI (from $39/bbl to $38/bbl).

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