OIL PRICES: STOP PANICKING
Oil will rebound by the second half of next year as supply and demand don't justify the recent collapse and prices are now low enough to threaten investment in production, OPEC's Secretary-General said.
While a report today from the Organization of Petroleum Exporting Countries cut forecasts for crude it will need to provide for most of the next two decades because of the shale-energy boom in the U.S., Secretary-General Abdalla El-Badri said the group isn't "panicking" amid this year's plunge.
"We're concerned but not panicking," El-Badri said at a press conference in Vienna today. "The price will rebound by the second half of next year. This situation of low prices cannot continue because if it continues, most of the investments will be stopped."
Brent futures have tumbled 28 percent since mid-June, a move El-Badri said was excessive given that supply and demand levels are "reasonable."
Ali al-Naimi, oil minister of Saudi Arabia, OPEC's biggest member, is attending a conference on climate change in Venezuela and met with the country's foreign minister, Rafael Ramirez. Ramirez told reporters they mostly discussed climate change yesterday.
Al-Naimi's trip had been planned a about a year in advance and there's nothing "peculiar" about the visit, El-Badri said. Oil prices have reacted to the "symbolism" of the trip as Saudi Arabia and Venezuela coordinated output cuts in the 1980s, according to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
The Saudi minister is due to attend another event in Mexico next week. OPEC hasn't invited producing countries from outside the group to it attend its ministerial meeting on Nov. 27, El-Badri said.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.