Crude oil prices are trading sharply higher in futures market on Friday.
“However, I feel much caution should be exercised and it is important to observe the Chinese markets in the coming sessions before calling it a bottom”, he said in a market commentary.
“In 2015-2016, net capacity additions will be more than needed, which will cause the global utilization rate to decline, and casts a doubt on the continuation of current unusually high refining margins”, the IEA said in its monthly report.
Oversupply was blamed for a huge crash in prices past year. “Onshore storage space is limited”, it said, adding: “Something has to give”. Next year’s demand will average 95.2 million barrels a day. At 96.6 mb/d, world oil production was an impressive 3.1 mb/d higher than a year earlier, with OPEC crude and natural gas liquids accounting for 60% of the gain.
They announced there is no overall creation increase out the Organization of Petroleum Exporting Countries year after year for very 1st time ever since 2008.
Iraq pushed its crude production up to an all-time high of 4 million barrels a day. “Recent developments suggest that the process will extend well into 2016”, it said.
The IEA implied what the International Monetary Fund reported recently. Stocks are rising in anticipation of such a deal.
“Physical oil market fundamentals remain weak and, in the absence of Opec production cuts or material supply disruption, this is unlikely to change meaningfully”, Deutsche Bank said in a note.
In Tehran, Ali Akbar Velayati, top adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, said his country had no intention to abandon nuclear talks with the United States and other world powers aimed at lifting sanctions on its crude exports. “There is no doubt that any positive outcome of the deal will have an immediate downward effect on the prices even before any actual Iranian production rises”, the report said.
The agency said OPEC output stood 1.5 million bpd above the previous year.
The IEA notes that a slowdown in demand this year comes as supplies from the Middle East, Russian Federation and the US are at or near a peak. “The supply response to lower prices is on the way”.
“Cost savings, efficiency gains and producer hedging have let light tight oil producers defy expectations until now, but growth ground to a halt in May and will likely stay there through mid-2016”.