OPEC sees oil supply from non-group nations falling

Opec as a whole pumped more oil in November than in any month since 2008 despite forecasting little demand growth for crude next year in a bid to defend market share.

According to the OPEC report, fall of oil supply to the global market is expected on all the countries of the former Soviet Union (FSU) in 2016. Supplies at Cushing, Oklahoma, the delivery point for WTI futures and the biggest US oil-storage hub, expanded by 423,000 bbl to 59.4 million, the highest level since May.

Prices of Brent crude on ICE were up 0.27% at $40.22 per barrel, having fallen towards seven-year lows earlier in the week.

"The price of black gold yet started to fall with the increase in OPEC production in November, which dismays investors who think that the glut is here to last again" said Bernard Aw, analyst at IG Markets in Singapore.

The IEA said OPEC's decision last week to impose no ceiling on its output appeared to signal a renewed determination to maximise low-priced OPEC supply and drive out high-cost non-OPEC production regardless of price. United States crude oil also fell, down 50 cents to $36.12 a barrel. The contract decreased 40 cents to US$36.76 yesterday, the lowest close since February 2009.

The new December monthly report suggested however that its ploy may be taking longer than expected to bite, with the cartel obliged to increase its forecast for 2015 non-OPEC production.

Brent crude prices will continue to struggle due to a large global commercial oil stock surplus, which PIRA estimates will total 500 million barrels above normal levels by end 2015.

The November production is about 900,000 bpd more than Opec's estimated demand for crude next year.

Jefferies bank said that an "inventory overhang is likely to expand significantly through the first half of 2016 and will likely suppress oil prices in the near-term".

Between 0.5 million and 2 million barrels of crude oil are being produced in excess of demand every day, creating a glut that has pulled down prices by nearly two-thirds since 2014. For 2016 OPEC expects an increase of 1.25 million barrels per day, unchanged from last month's forecast, to 94.13 million.