Crude oil prices moved sharply lower in early Friday trading following a report from the Organization of Petroleum Exporting Countries showing markets are still oversupplied. File photo by Monika Graff/UPI | License Photo
NEW YORK, May 13 (UPI) -- Oil prices fell sharply in early Friday trading after OPEC reported in its latest monthly report that production increased while the global economy stood still.
The Organization of Petroleum Exporting Countries said it expected the economies of India and China would expand to a "considerable" level this year, while Brazil and Russia linger in recession.
"World economic growth is forecast at 3.1 percent in 2016, after estimated growth of 2.9 percent last year, both unchanged from the previous month," OPEC said in its market report for May.
Supply-side strains have lingered in the oil economy for nearly two years, pushing crude oil prices far below levels above $100 per barrel that were common in 2014. Global economic growth has been too slow to take up the surplus, a trend reflected most recently in weak labor figures from the United States.
The price for Brent crude oil was down 0.85 percent to start trading Friday in New York at $47.67 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was down 1.1 percent to open at $46.17 per barrel.
On the demand side, OPEC left its forecast unchanged for the year at 1.54 million barrels per day. A report from the Western-backed International Energy Agency this week suggested demand was picking up in growing economies like China, while gains in global oil production were slowing down.
In April, OPEC said production from its member states rose slightly. OPEC members earlier this year had considered holding production levels steady in order to stabilize prices, though Iran balked because it's seeking to regain a market share lost to international sanctions.
According to OPEC, Iranian increases in crude oil production were the most for any other member state in April. The No. 3 producer behind Saudi Arabia and Iraq, respectively, Iranian oil production increased 6 percent from March.
The market report for May said crude oil price momentum was pulled higher by a decline in the value of the U.S. dollar, supply disruptions and expected declines in non-OPEC production. Gains were supported further by talks of the production freeze.
"Nevertheless, fundamentally, oversupply still persists, and oil output remains high," OPEC said.