Oil prices fell yesterday as concern over a global supply glut intensified after OPEC Secretary General Abdullah Al-Badri indicated that the organization would not cut production. A weaker dollar limited crude’s losses.
Brent was heading for a fifth weekly loss after prices gave up early gains and turned lower. Al-Badri said OPEC members would not reduce output, arguing that rising demand would prevent further price declines. He added that an OPEC cut of 2 million barrels per day would not support prices. A Reuters survey published that week showed members produced around 31.25 million barrels per day in the second quarter, about 3 million above daily demand.
September Brent futures fell 49 cents to $52.82 a barrel after settling seven cents lower in the previous session. September US crude fell 61 cents to $47.91 after closing 27 cents lower the previous session.
ABN AMRO maintained its oil-price forecasts for the current year but reduced its 2016 projections because of a worsening global supply glut. It kept its current-year forecasts at $60 for Brent and $55 for US West Texas Intermediate. It lowered the following year’s forecasts by $10 to $65 and $60 a barrel respectively.
Sources said major Chinese state oil companies planned to begin producing 160,000 barrels per day at two projects in southwestern Iran by October, helping Tehran increase output before sanctions were lifted. Sources at Sinopec and China National Petroleum Corporation said the companies had intensified work since late the previous year on existing major contracts, encouraged by Iranian partners as sanctions-relief negotiations continued. Sinopec was expected to begin producing 85,000 barrels per day at Yadavaran after completing the first development phase under a $2 billion deal signed in 2007 for eventual output of 200,000 barrels per day. Company spokesman Lu Dapeng said the project was progressing smoothly and production of 85,000 barrels per day was expected by year-end.
A CNPC source expected the group to start the first phase of North Azadegan by early October but did not specify production volume.
Meanwhile, Asian imports of Iranian crude rose year on year in June. Government and tanker-tracking data showed that the four largest buyers—China, India, Japan, and South Korea—imported a combined 1.17 million barrels per day the previous month, more than 13 percent above a year earlier.
Russian Energy Minister Alexander Novak said yesterday that talks with Ankara on the Turkish Stream gas pipeline were continuing and Moscow had agreed to a 10.25 percent discount on gas supplied to Turkey. His comments followed Turkish officials’ statements to Reuters that negotiations had been suspended because Moscow had not signed an important agreement on the discount.