NEW YORK, Dec. 9 (UPI) — Crude oil prices gained back some ground at the start of trading Wednesday, as expectations of lower U.S. oil production balanced against long-term pessimism.
“Bullish arguments sound increasingly hollow while bearish predictions of even lower prices ring a little less feeble,” read a monthly column from Energy Intelligence.
This week, the price for the global benchmark, Brent, crashed below $40 per barrel for the first time since 2009 as markets recoiled in the wake of last week’s fractured end to a policy meeting for members of the Organization of Petroleum Exporting Countries. OPEC failed to issue any concrete statement on output even though markets heavily favor the supply side.
Crude oil prices were flat to modestly higher at the start of trading in New York. Brent was up about a half percent to $40.45 per barrel early in the session. West Texas Intermediate, the U.S. benchmark for crude oil prices, performed better at the open, gaining nearly a full percent to $37.86.
A short-term market report from the U.S. Energy Information Administration found lower crude oil prices were curbing total U.S. output. Production in November was down by about 60,000 barrels per day when compared with October.
“Crude oil production is forecast to decrease through the third quarter of 2016 before growth resumes late in 2016,” the report read. “Projected U.S. crude oil production averages 9.3 million bpd in 2015 and 8.8 million bpd in 2016.”
Lower production from non-member states was given as one of the reasons for a status-quo policy from members of OPEC, who are continuing with steady production rates despite the expected return of Iranian crude oil in the coming post-sanctions era.
Fatih Birol, executive director of the International Energy Agency, told CNBC from the sidelines of the U.N. climate summit in Paris crude oil prices will likely remain suppressed moving into 2016.
“When we look at 2016, I don’t see many reasons why we can see upward pressure on the prices,” he said. “Demand is weaker and we may well see Iran come back (to the market) and there will be a lot of oil.”
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