Oil's collapse has been rapid and outpaced the predictions of most Wall Street forecasters. One factor has been that the weaker prices are taking longer to impact U.S. shale producers than previously thought. OPEC has also been pumping more than it has in several years, and reported a 2.87 million barrel a day global oversupply in the second quarter.
At the same time, OPEC said its production rose to a three-year high this summer. OPEC said it pumped 31.5 million barrels a day in July, up 100,000 barrels on higher output from Iraq, Saudi Arabia and Angola. OPEC also said global demand growth should pick up in 2015 by 90,000 barrels a day.
In its monthly report Tuesday, OPEC raised its forecast for non-OPEC supply this year by about 90,000 barrels per day. OPEC also raised its estimate of 2015 world oil demand growth by 90,000 bpd, but due to rising supply expected from other producers, demand for OPEC crude remains at 29.23 million barrels per day.
Saudi Arabia told OPEC that it trimmed output by 200,000 barrels a day to 10.36 million barrels in July, after a record high in June.
"That's more seasonal. They're using less crude for their own power generation," said Kilduff of the Saudi cut. "They're getting their lunch eaten a little by the Russians and Iraqis in Asia." Saudi Arabia has reportedly slipped into second place exporter to Japan after falling from the top spot in both China and India.
Meanwhile, Iran was reported to have raised its oil production to 2.86 million barrels a day, the highest level since sanctions against the country were strengthened in June 2012.
Iran is supposed to wait for congressional approval of the nuclear deal before it moves to return its oil exports to world markets, but Kilduff said Iran could move sooner. Iran has an estimated 40 million barrels of oil stored in tankers, and Kilduff expects Iran to be aggressive in selling it.
"Over 2 million barrels of their floating storage is already gone. They're going to ramp up
West Texas Intermediate crude futures skidded through the year's lows and looked set to break into the $30s-per-barrel range after the Organization of the Petroleum Exporting Countries admitted to more pumping and China devalued its currency, sending ripples through global markets.
"The familiar theme of oversupply and shaky demand is getting punctuated today," said Again Capital partner John Kilduff, who has expected WTI to aim for $30 per barrel. WTI futures for September fell more than 4 percent Tuesday and traded below $43.26 per barrel, the March 17 low.
Kilduff said, "$42.03 is going to be key. Then we'll be back to extrapolating back down to the low 30s from the financial crisis." The intraday low in 2015 was $42.03, also reached in March. Brent futures, meanwhile, were just below $49 per barrel.
"Overall, I think this devaluation by the Chinese suggests maybe the slowdown in economic growth is greater than people anticipate, and that's where fear on the demand side is coming from and driving us lower," said Gene McGillian, analyst with Tradition Energy.
He said if oil breaks $42.03, the next target is in the upper $30s at about $36, and then $32. The question is how fast could oil spring back, if it does reach the lows set in 2008 and 2009 during the financial crisis.
"There's no positives on the supply side, and there's bearish fears on the demand side," McGillian said.
OPEC on Tuesday upped its forecast of oil supply from nonmember countries in 2015. Oil prices have been more unpredictable because of the unknown factors around the impact on U.S. shale production, a relatively new phenomenon.
Production increased by about 600,000 barrels a day in the U.S. this year and has been holding steady at about 9.4 million barrels for several months. Typically, the shock of falling prices shakes out producers that find it difficult to fund operations, but the U.S. industry has kept drilling.
Ron, shouldn't you have checked what the covenants on LINNS bonds is before you bought hem.
And isn't that monthly interest of 43.31 per bond taxable.
That was 18 months ago. Be your own investor.
Norris in case you haven't noticed this about Trump. He is a self serving blow hard. I would love to send him to mexico. Only problem is he may not come back but in a box. Shoot the border patrol said they wouldn't be available when he went down to the border after he tongue lashed them,
What did I tell you about china! Am I right or wrong.
Sentiment like in the everyone is thinking negatively about oil. And once they start thinking positively oil will go up. And that is all it will take. Not a change in demand, growth, over supply and the stronger dollar.
Refiners are the place to be. Look at the big pops in them recently.
Self professed Trump. I used the system to my advantage and my money while i filed 4 BKs. This of course While I BKed the smaller companies. Isn't that great of Trump. Go conservative party.
ID just created 8/6/15. Nice work dougmiller_sux and the rest of your dougmiller ids. You have degraded this board along with the others.
How is my favorite beautch doing. You know your context and words used are very similar to centauri and the rest that showed up. Can you explain why
Proof and not what centauri is using for they have reworded what was said by Robby referring to robby :himself" and centauri being the same person. And do you own LINN?
Yes and it is amazing how you centauri renaute blackiethecat rudolfomanzineres llike33 iikee and all the dougmiller ids showed up at about the same time or not to far apart. And can you please explain this anomaly. Funny how you accuse just one person of having all of these ids when you are the cause of all of this mess since all of those ids showed up.
After all his negativity on LINN he just said he doubled down on Friday buying more. One confused character. But vey entertaining.
Nope I never erased anything believe you are erasing or another one of your clans members. Couldn't take the heat but love dishing it out. sissy.............