A new President in the USA boosted the value of the dollar but did not alter the price of oil this week as the oversupply continues and the market remains stagnant.
In early trading on Friday, Brent crude was priced around US$46 with WTI now close to US$45 a barrel.
Oil price stability was on everyone’s mind in Abu Dhabi this week, but it was clear that the current price range is not the ideal target.
Leading industry CEOs attended the annual ADIPEC gathering with the OPEC Secretary General, Mohammad Barkindo delivering a keynote address saying he was optimistic for a unified agreement in Vienna later this month.
Russia on board with OPEC
He added that he had “heard from the highest quarters in Moscow that Russia is on board.”
The Russian energy minister Alexander Novak told reporters in Russia that he too was hopeful of reaching a deal.
Optimistic hopes and words were abundant at ADIPEC as the UAE energy minister, Suhail Al Mazrouei said he believed we were near the bottom of this negative cycle adding, “the glut is almost gone from where it was a year ago.”
Exxon still sees a million barrels a day of excess
The CEO of ExxonMobil, Rex Tillerson, was not as cheery as he expressed concern that the market was still oversupplied by more than a million barrels a day.
The key energy organisations released their monthly reports this week with the International Energy Agency calling for a cut in OPEC production as the only way to balance the market.
Meanwhile OPEC issued a “marginal downward adjustment” in global oil demand growth for this year at 1.23 million barrels a day to average total demand of 94.40 million barrels a day.
The organisation maintained its growth projection figures for 2017, saying it expects global oil demand to be 95.55 million barrels a day next year.
OPEC members will continue production but the supply from non-OPEC is expected to decline this year and next.
IEA sees demand growth this year and next
The IEA sees demand growth for 2016 at 1.2 million barrels a day, with little change next year.
OPEC launched its World Oil Outlook this week in Abu Dhabi; a substantial book of research and oil industry focus with medium and long term oil outlook scenarios.
The report says that the OPEC reference basket [ORB] will average US$40 a barrel this year.
The ORB is the collection of OPEC member crudes and is usually a lower price indicator than the Brent crude or WTI average.
The report also looks in detail at economic growth and the role of oil finding that “while analysts initially anticipated that lower oil prices would have a positive impact on global economic growth, the reality is that the overall impact has been neutral.”
The report has an in-depth section on transportation and notes that US gasoline demand was at a record high this year.
The report concludes that global demand for oil will remain steady in the next decade, “hovering in the range of 33.6 to 33.8 million barrels a day,” until 2025.
This annual report is available for download on the OPEC website as well as the monthly reports.
The IEA currently sees OPEC production at 33.83 million barrels a day.
The OPEC Algiers agreement has indicated a lower production band ranging between 32.5 and 33 million barrels a day and Mr. Barkindo insists that he will “continue consultations in the coming weeks, and this includes with non-OPEC nations.”
He added that “it is essential that all producers, both OPEC and non-OPEC, take coordinated action” as he reiterated his continued commitment to help “return sustainable stability to the market.”