(MENAFN- Kuwait News Agency (KUNA)) KUWAIT, Jan 21 (KUNA) -- KAMCO Investment Company on Saturday said that the year 2016 recorded one of the most volatile years for the oil market with crude prices reaching the lowest level in more than a decade as oil producers continued to pump oil at breakneck speed in order to retain their market share.
The obvious victims were high cost producers, especially shale producers in the US and Canada; however, the rate of fall in production due to the decline in oil prices was much slower than initially expected as shale producers pushed the life of existing oil wells and curbed new drilling activity, KAMCO added in its latest report.
The report said that OPEC crude closed the year at a price of USD 53.3/b and Brent crude at USD 55/b, the highest level in 18-months with a yearly gain of 70 percent and 50 percent, respectively.
Much of the aforementioned gains came during 2H-16 and especially during December-16 as both OPEC and non-OPEC producers committed to output cuts, a deal that was highly uncertain as per oil watchers.
More surprising was the adherence to the oil output cuts as seen from the headlines during January-17 with Saudi Arabia and Kuwait reducing their respective oil outputs by more than the committed quantities. Saudi Arabia's oil output fell to a 22-month low level of below 10 mb/d in January-17, while Kuwait's oil output fell to 2.707 mb/d as oil well maintenance coincided with output cut agreements.
The Kingdom also said that they would consider extending the production agreement beyond the six months as the pace of market rebalancing is expected to accelerate due to the agreement coupled with robust demand in the market. Meanwhile, the KAMCO report went on, the International Energy Agency (IEA) recently gave a contrarian view on the short term oil market in 2017. It said that oil prices are expected to fall later this year despite the OPEC agreement as US shale producers would pump more as a response to rising oil prices. According to the report, the average monthly OPEC crude price during December-16 increased by a strong 20 percent to USD 51.67/b, the highest monthly average since July-15. The rise in Kuwait average crude price was even stronger at 21.5 percent and stood at USD 51.13/b while Brent crude increased by 19.1 percent to reach an average price of USD 53.29/b during December-16.
In terms of oil production, 2016 witnessed an increase of 576 tb/d or 2.0 percent in its output from the current OPEC members (that excludes Indonesia but includes Gabon) to reach 33.1 mb/d in December-16. Indonesia was suspended from the group less than a year after the country joined OPEC as it did not agree to cut its production by 5 percebt as required by the OPEC agreement. The increase for 2016 was primarily on the back of more than 1 mb/d increase in oil production from Iran followed by 260 tb/d increase in Libya and 230 tb/d increase in production by Saudi Arabia as compared to 2015. Iraq and UAE also added a combined 300 tb/d during 2016 as compared to 2015, KASMCO said.
On the other hand, the biggest decline was reported by Nigeria with its production down by 440 tb/d followed closely by 396 tb/d decline in Venezuela and 189 tb/d decline in Angola. (end) fh.msa.msa
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