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1/19/2016, 12:46 PM (Source: TeleTrader)
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Oil Market Report: Oversupply may push the prices down

Immense oversupply, coupled with lower demand for oil, and unusually mild temperatures across the northern hemisphere, resulted in a drop of global demand for oil to half in the last quarter, according to International Energy Agency's Oil Market Report published on Tuesday.

That could lead to a further decline in the oil prices, while the oversupply will persist until the end of 2016, according to IEA's estimations. International benchmark Brent was 4.21% higher at $29.96 a barrel, while the North American light sweet crude WTI rose 3.29% to $31.11 a barrel at 12:33 p.m. CET.

There is weak economic sentiment in the commodity-dependent economies such as Brazil, China and Russia, which results in the significantly lower demand for crude oil worldwide – from 2.1 million barrels per day in the third quarter of the last year, to just one million barrels per day in the fourth quarter.

Global oil supplies have increased by 2.6 million barrels per day in 2015. It was a similar picture with gains of 2.4 million barrels per day, a year before. However, in December, the growth has eased, as production outside of the Organization of the Petroleum Exporting Countries (OPEC) levels were below those in previous year, a trend not seen since 2012.

OPEC members’ crude production was 32.28 million barrels a day, 90,000 barrels lower than in December. The data include those from Indonesia, as the country rejoined OPEC, and its oil is in the price basket. Another OPEC member, Iran, has announced it would boost its output by 500,000 barrels a day.

Global inventories rose by one million barrels a day in the last year, which would add 285 million barrels by the end of the year. Another problem is that of storage, since the infrastructure is stretched to the limit despite significant capacity expansions, and it looks like floating storage would become profitable, said the IEA report.

Global refinery production averaged 79.5 million barrel a day in the fourth quarter, which was down 300,000 barrels a day from the previous IEA estimate. The fall came due to lower-then-expected throughputs in Asian non-members of the Organisation for Economic Co-operation and Development, except China.

Breaking the News / ZR