OPEC production surveys should confirm oversupplied oil market

After rising, oil prices are defending their higher levels. Clearly the market views prices of just shy of $49 per barrel in the case of Brent and almost $46 in the case of WTI as the sort of level at which bullish and bearish factors more or less cancel each other out. 

After all, prices have been hovering around these marks for two months now, and little is likely to change in the near future. Despite sporadic news of shrinking stocks, yesterday PJK International reported a nearly 100,000 barrel decline in gas-oil stocks in the Amsterdam-Rotterdam-Antwerp region, the overall picture of current oversupply on the crude oil market remains unchanged. 

News agencies today will be publishing their survey-based estimates of OPEC production in October, which are likely to show once again which are the main sources of the oversupply, Saudi Arabia and Iraq. 

According to the Iraqi oil minister, the latter is continuing to produce over 4 million barrels per day, as compared with a figure of 3.3 million barrels per day a year ago, according to Bloomberg. Saudi Arabia also appears to be producing a good ½ million barrels per day more than a year ago. 

"The largest OPEC producer is thus likely to have succeeded in significantly expanding its market shares in Asia. The same is suggested by Iran's latest export figures, for Asian crude oil imports from Iran were 6% down on last year in the first nine months of the current year", says Commerzbank. 

Following the lifting of sanctions against Iran, the price war over market shares in Asia between the two arch rivals is likely to have a dampening effect on prices.