Petroleum Africa
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Wednesday, January 20, 2016
The price of crude is no longer flirting with the $30 per barrel price and has dropped firmly below it. According to the IEA’s monthly report released on January 19, the stocks will stay oversupplied until at least late-2016 due to unseasonably warm weather and rising supply.
The IEA report said that warm winter weather around the world cut global oil demand growth to a one-year low of 1 million bpd in Q4 2015, down from a near five-year high of 2.1 million bpd in previous quarter.
Producers around the world are keeping their taps wide open despite the low crude price; OPEC’s basket of crude came in well below $30 per barrel on January 18, registering a price of $23.58 per barrel. Brent crude futures (LCOc1) fell to a low of $27.67 per barrel, a level last seen in November 2003. New York prices also hit a low of more than 12 years at $28.36 per barrel.
Some blame the further drop in crude to Iran reentering the market and its statement that it would raise output by an initial 500,000 bpd now that international sanctions have been lifted. According to the IEA the increase from Iran will not be that much however, closer to 300,000 bpd by the end of Q1 2016.
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