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Oil prices fall 4 percent on news of oversupply

By Daniel J. Graeber
Oil prices fall 4 percent on news of oversupply
Shale oil and gas drilling rig. (Photo by Shutterstock)

NEW YORK, Nov. 13 (UPI) -- Crude oil prices fell nearly 4 percent after the release of a report showing stockpiles of crude oil continued to build in the U.S. market, even though a U.S. government report showed declining production from most shale basins.

Brent crude oil fell below $45 a barrel for the first time since August.

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The International Energy Agency published its monthly report for November on Friday, forecasting the global demand for oil in 2016 will slow to 1.2 million barrels per day after hitting a five-year peak this year at 1.8 million bpd. Output from the Organization of Petroleum Exporting Countries, meanwhile, has been relatively unchanged since October, while shale oil production in the United States is expected to fall.

On the demand side, IEA said commercial inventories continued to build despite static and falling crude oil production.

"The pace of global stock-building slowed during the third quarter to 1.6 million bpd from 2.3 million bpd in the second quarter, but remained significantly above the historical average," it said.

Oil prices were mixed in early Friday trading. Brent crude oil gained about 0.8 percent from Thursday's massive retreat to start the day at $44.42 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, lost 0.6 percent to $41.50 per barrel.

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In its short-term market report, the U.S. Energy Information Administration said it expected the balance between supply and demand to move closer to equilibrium starting in 2016.

EIA expects that Brent crude oil prices will average $54 per barrel and WTI will average $50 per barrel for full-year 2015. Brent for next year increases in value by 3.7 percent, while WTI gains 2 percent.

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