Light, sweet crude oil prices for November delivery dropped on both the New York and London markets on Oct. 13 following a report from a Paris group that world oil oversupply will continue into 2016 and an analyst’s suggestion that low prices could continue until late next year.
A projected marked slowdown in oil demand growth next year and the anticipated arrival of additional Iranian barrels—if international sanctions are eased—likely would keep the market oversupplied through 2016, the International Energy Agency said in its October Oil Market Report.
IEA’s latest estimate showed global demand growth was expected to slow to 1.2 million b/d in 2016 from its 5-year high of 1.8 million b/d in 2015. Revised global oil demand was estimated at 94.5 million b/d in 2015 and 95.7 million b/d in 2016, IEA said (OGJ Online, Oct. 13, 2015).
Separately, Ed Morse, analyst for Citigroup Inc., said low oil prices could continue to be out of balance until late 2016.
“There is a long list of bearish factors that have not disappeared from the market, whether related to inventory increases, [Organization of Petroleum Exporting Countries] production, or oil demand,” Morse said. “There are plenty of reasons why market sentiment is likely turn bearish again going forward.”
The weekly US government report on crude oil and product inventories was scheduled to be released Oct. 15, one day later than normal because of the federal Columbus Day holiday on Oct. 12.
The natural gas contract for November declined 3.7¢ to a rounded $2.50/MMbtu. The Henry Hub, La., gas price was down 1¢ to $2.43/MMbtu.
Heating oil for November delivery was down 3¢ to rounded $1.47/gal. The price for reformulated gasoline stock for oxygenates blending for November was down a rounded 2.7¢ to a rounded $1.31/gal.
The November ICE contract for Brent crude decreased 62¢ to $49.24/bbl, and the December contract dropped 56¢ to settle at $49.69/bbl. ICE gas oil for November settled at $456/tonne, down $20.25.
The average price for the OPEC basket of 12 benchmark crudes was $46/bbl on Oct. 13, down $1.97.
Contact Paula Dittrick at email@example.com.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.