The day of reckoning has arrived for the oil price with the head and shoulders pattern I have been tracking for two months finally completing in recent weeks. It became a rather drawn out affair with markets awaiting the outcome of the OPEC meeting of 4 December. In the event, OPEC elected to stay the course and did nothing. With WTI closing at $40 and Brent on $43 on Friday both are testing support levels. WTI in particular has had strong support at $40 in recent weeks. Should this support be broken then another major down leg is to be expected to the vicinity of $20. I can see nothing in the numbers presented below to provide hope that $40 may hold. The market remains over-supplied and awash in oil. Lower price is required to remove supply from the market.
- World total liquids production up 240,000 bpd to 97.09 Mbpd, a new record high.
- OPEC production down 20,000 bpd to 31.72 Mbpd (C+C)
- N America production up 260,000 bpd to 19.66 Mbpd.
- Russia and FSU up 90,000 bpd to 14.01 Mbpd
- Europe down 10,000 bpd to 3.40 Mbpd (compared with October 2014)
- Asia down 50,000 bpd to 7.99 Mbpd.
- Middle East rig count is rising. The international oil rig count is stable. The US oil rig count is falling.
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