Crude oil prices extended their slump on the New York market with a Dec. 11 settlement of less than $60/bbl for January, and prices continued downward in early Dec. 12 trading after the International Energy Agency cut its global oil demand growth forecast for 2015.
IEA cut its demand growth forecast for the fifth time in 6 months on Dec. 12, although the Paris group said it still expects robust production increases from nations outside the Organization of Petroleum Exporting Countries.
The latest IEA forecast calls for world oil demand rise 900,000 b/d in 2015, which is 230,000 b/d lower than its previous forecast for 2015. Demand growth was revised based on lower expectations from the former Soviet Union and other oil-exporting countries, said the latest IEA Oil Market Report.
“A strong dollar and the lifting of subsidies have so far limited supportive price effects on demand, which is now seen reaching 93.3 million b/d next year from 92.4 million b/d in 2014,” IEA said.
The agency also said that “barring a disorderly production response, it may well take some time for supply and demand to respond to the price rout.”
Producers already are slashing 2015 spending plans in response to lower oil prices, “but this is more likely to affect medium- and long-term output than short-term supplies,” IEA said. “So long is the lead of oil projects that price swings can take time to work their way through supply. Projects that have already been funded will for the most part go on.”
The natural gas contract for January settled down 7.2¢ to a rounded $3.63/MMbtu. The cash gas price at Henry Hub, La., went the opposite direction, gaining 7¢ to $3.68/MMbtu on Dec. 11.
Heating oil for January delivery edged up 1.5¢ to a rounded $2.06/gal. Reformulated gasoline stock for oxygenate blending for January was down by 1.7¢ to a rounded $1.62/gal.
The January 2015 ICE contract for Brent crude oil fell 56¢ to $63.68/bbl. The February contract dropped 57¢ to $63.99/bbl. The ICE gas oil contract for December held unchanged at $581.75/tonne.
The average price for OPEC’s basket of 12 benchmark crudes on Dec. 12 was $60.50/bbl, down 85¢.
Contact Paula Dittrick at email@example.com.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.