Oil came back from its highest level since July 2015 on Tuesday as new data from OPEC show it’s pumping out huge amounts of oil even as the cartel is getting set to tighten the spigots in the new year.
The price of a barrel of the North American oil benchmark, West Texas Intermediate, was down $ 1.20 US on Tuesday to around $ 50.50 US a barrel. It hit its highest level since July 2015 a day earlier, above $ 52 a barrel.
Freight Investor Services International fuel broker, Matt Stanley, said the oil market was trying to find “some kind of level it is happy settling at”. “I have a feeling it is more towards the $ 50 per barrel range than $ 55 per barrel, not least because there is still ambiguity around production levels.”
Oil has marched steadily higher for the past two months ever since rumours came out that the Organization Of Petroleum Exporting Countries was getting close to an agreement to limit how much crude oil it is putting out, starting next year.
This weekend, the cartel will meet with non-members in Vienna to hammer out the details of a deal that is expected to boil down to a cut of 600,000 barrels per day by non-members on top of the 1.2 million barrel cut the cartel has already agreed to.
And Russia reported November average daily oil production at 11.21 million barrels a day, its highest in nearly 30 years. That means OPEC and Russia alone produced enough to cover almost half of global oil demand, which is just above 95 million barrels of crude oil every day.