Tim Evans, an energy analyst at Citi Futures said the global surplus of crude oil is likely to persist despite the recent declines in US oil production and inventories.
“OPEC apparently prompted some buying with the leak of an internal report forecasting a price recovery to the $80 level by 2020, but in our view that’s more of a hope than a promise that OPEC will be working to target that level,” he notes. He points out that although OPEC projects a daily output of 30.45 million barrels in 2016 — a million barrels per day below OPEC’s August 2015 production level — there could still be a major supply overhang if the Iranian oil ban is lifted as expected. Nymex oil futures are down 42 cents at $46.26/bbl, Brent futures are down 35 cents at $48.57/bbl.