OPEC expects balanced oil market in 2016

The IEA expects a further reduction in investment next year due to continious fall in oil price. Never before in the past 25 years have there been two years of declining investment. The IEA anticipates this to have an impact on the supply of oil in the next few years. 

The Saudi Arabian vice oil minister made similar remarks yesterday: because projects have been cancelled or postponed, he believes that non-OPEC supply will decrease in 2016 and thereafter. 

OPEC Secretary General el-Badri envisages a balanced oil market in 2016. Shale oil production should prevent prices from making any significant gains in the next few years, though. 

As the oil prices reach the marginal costs of shale oil production, which amount to approximately $60-65 per barrel, production is expected to escalate, says Commerzbank. Currently, the prices are too low for many shale oil producers. 

Therefore, the US Energy Information Administration (EIA) expects US shale oil production to fall by 118,000 to less than 4.95 million barrels per day in December. If this happen, this would be the eighth consecutive monthly decline and the lowest production level in 15 months.