Oil prices continue to tumble, having slipped below the psychological important $100 a barrel threshold.
Brent crude, the most widely traded international benchmark, is in fact below $99 dollars.
Soaring US shale oil production and the return of exports from Libya is boosting supply while demand from industrialised nations remains weak.
The latest figures from the Organisation of the Petroleum Exporting Countries track the falls as OPEC’s production rose in August with the reopening of Libyan oil ports and fields.
Industry watcher Ole Hansen of Saxo Bank told euronews: “Rising supplies are keeping prices under pressure. Some of the geopolitical risk premium that we saw building up over the summer, especially related to Iraq, has disappeared. We are coming into the time of year – over the next couple of months – where demand from refineries generally tends to slow down, so the near-term outlook is possibly for weaker prices still.”
And in its monthly market report OPEC predicts even weaker demand for its crude, even with winter coming up.
It cut the forecast for the expected demand for crude from the group by 160,000 barrels per day (bpd) in both 2014 and 2015 due to stronger supply from countries outside the organisation.
That is bad news for the seven of the 12 OPEC members, including Iraq, Iran and Nigeria – as well as Russia – which need far higher oil prices to cover their state spending.
However to stop prices sliding, Ole Hansen says, the OPEC countries would have to cut production: “The rise in OPEC production we saw last year was in order to alleviate the pressure from reduced supplies from Libya. They’re now coming back, so we should expect some kind of reaction sooner or later. But at the moment we’re seeing a production rise from Iraq, it could potentially rise from Iran as well and Saudi Arabia at this stage is willing to give up its market share.”
Crude may be cheaper, but don’t expect the price of petrol at the pump to fall.
One reason for that is that commodity traders are increasingly moving oil into storage, particularly of the floating kind, waiting for prices to go back up.
Energy industry analysts estimate about 50 million barrels of oil are currently being kept in tankers on the high seas.