Prices for oil fell more than 1 percent on Wednesday as International Energy Agency informed that demand for oil in the coming year may not be as much as it was expected. The shift in the narrative has had investors worried over the future of oil prices in the international markets.
Over the last few weeks, industry reports have highlighted and anticipated a case for rising oil prices in the future as geo-politic risks, supply cuts and increased demand converge at the same time prompting a significant recovery in oil prices.
Brent crude futures were at $61.33 per barrel at 0515 GMT, down 88 cents, or 1.4 percent from their last close.
U.S. West Texas Intermediate (WTI) crude was at $55 per barrel, down 70 cents, or 1.3 percent.
According to recent reports, average inventory volumes around the world have reached their 5 year position. With a strong outlook for demand, it was all set for investors to go bullish. But recent reports from IEA have sent a wave of volatility in the market who were sure of the future of oil prices until now.
Meanwhile, OPEC Secretary General Muhammad Barkindo has said that, “The oil market is re-balancing at a quickening pace and production cuts are the only viable option to restore stability”. OPEC is expected to decide at its meeting later this month (30th of November) whether or not to extend the cuts, UAE Energy Minister Suhail AL Mazrouei said in a speech at a conference in Abu Dhabi.
According to UAE’s Minister, coordinated cuts by OPEC and suppliers outside the group have helped trim crude inventories from record storage levels.
UAE Energy Minister further said that he is highly optimistic about 2018 which will be a recovery year for oil markets.