World Crude Oil Surplus Largest In 10 Years
$OIL, $USO
Surplus Crude Oil inventories are at the highest marks in at least 10 years, this because of increased global production, according to OPEC (Organization of Petroleum Exporting Countries).
Stockpiles in developed economies are 210-M bbl higher than their 5-year average, exceeding the glut that accumulated in early Y 2009 after the financial crisis, the organization said in a report.
Slowing non-OPEC supply and rising demand for Winter fuels could “help alleviate the current overhang,” enabling a recovery in prices, it said. The group’s own production slipped last month because of lower output in Iraq.
“The build in global inventories is mainly the result of the increase in total supply outpacing growth in world oil demand,” OPEC’s Vienna-based research department said in its monthly market report.
Crude Oil prices have lost about 40% in the past year as several OPEC members pump near record levels to defend their market share against rivals such as the US shale (tight Oil) industry. While inventories peaked in early Y 2009 before OPEC implemented record production cuts, this time the group has signaled it will not pare supplies to balance global markets and US output is gradually slowing in response to the price rout.
WTI Crude Oil futures extended losses after the report, falling 1.18, or 2.75%, to 41.75 bbl in New York at the close of pit trade.
OPEC ministers will meet on 4 December in Vienna to review their current policy. While some members such as Venezuela have recommended changing strategy to support prices, OPEC Secretary-General Abdalla El-Badri said on 9 November that supply and demand are on course to rebalance next year.
OPEC kept unchanged its Y’s 2015 and 2016 forecasts for global Crude Oil demand, production outside the group, and the amount OPEC will need to pump.
Non-OPEC supply will contract next year for the 1st time since Y 2007, decreasing by 130,000 BPD, as $200-B in spending cuts takes its toll on the global industry, according to the report. Projects equivalent to 5-M BPD output have been delayed or canceled, OPEC said.
| HeffX-LTN Analysis for OIL: | Overall | Short | Intermediate | Long |
| Bearish (-0.36) | Bearish (-0.33) | Bearish (-0.27) | Bearish (-0.47) |
Stay tuned…
HeffX-LTN
Paul Ebeling
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