The news that Brent Crude oil slipped below $35 a barrel for the first time since 2004 on Wednesday should come as little surprise. Granted, prices had risen as high as $39 per barrel earlier in the week following news of a widening of the rift between Saudi Arabia and Iran following Saudi Arabia’s execution of a Shiite cleric, but the sheer size of current production from both OPEC and non-OPEC countries, exacerbated by the imminent return of Iran to the international fold and lacklustre global growth leaves little room for any other result. Indeed, Natixis, in its oil market outlook for 2016 predicts that, based on current fundamentals, markets should remain in excess until at least the end of 2016. It sees production averaging well above 1.1m barrels per day for the year. “With this as the base of our analysis, we are looking at global crude stock builds of well over 800-900m barrels by the end of 2016,” the firm said…
[Source: Portfolio Adviser – Geoff Candy – January 7, 2016]
