Oil prices fell for the sixth session yesterday, recording the biggest weekly loss in ten months after the rise in the US crude oil production to a record high fears of a sharp increase of the global supplies. The oil suffered the settlement of yesterday's longest wave of losses since April after the US crude fell for the sixth session in a row. The decline comes when the global stock markets plunged as investors worried about inflation.
According to Reuters, the futures of crude for global Brent crude fell more than a dollar to 63.35 dollars a barrel. Earlier in the session, Brent crude futures fell to $ 63.70 a barrel, its lowest level since Dec. 20. West Texas Intermediate crude fell 80 cents to $ 60.35 a barrel after falling to $ 60.07, its lowest level since Dec. 29.
The two contracts have eroded more than 9 percent of the peak level of the current year that they reached in late January. Brent suffered a weekly loss of about 7 percent, the largest since April. While the US West Texas Intermediate crude fell nearly 8 percent, the biggest since March.
Oil received a number of negative data throughout the week, as the US production continued to rise to record levels, and the stocks in the world's largest economy continued to climb for the second week in a row. Iran has also announced its plan to increase production in the next four years by at least 700 thousand barrels per day.
Oil inventories in the United States rose for a second consecutive week, but it was below analysts' expectations. A statement issued by the US Energy Information Administration affirmed that the US oil inventories increased by 1.9 million barrels in the week ended February 2 to reach 420.3 million barrels.
Analysts had forecast that US oil inventories would rise by 3.2 million barrels last week. The US oil inventories rose 6.8 million barrels in the week of Jan. 26 for the first time in 11 weeks. In terms of US gasoline inventories, the data showed a rise of 3.4 million barrels last week.
According to the British oil industry company (BP), oil prices are expected to fall to between $ 50 and $ 55 by the end of this year; "BP will be able to make profits this year on the basis of $ 50 a barrel," said Brian Gilvary, chief financial officer of the company. Gilvary believes that oil prices will fall from current levels by the end of this year to record 50 to 55 dollars a barrel.
In contrast, Goldman Sachs raised its outlook for oil prices this year, expecting Brent crude to hit $ 80 a barrel later in the year, buoying huge demand. Analysts predicted in a note issued by the investment bank that crude oil prices would reach $ 75 a barrel during the next three months compared to previous estimates of $ 62 a barrel. Goldman Sachs sees Brent crude at $ 82.50 per barrel in the coming six months, and $ 75 a barrel in the next 12 months.
Brent crude was $ 71.28 a barrel two weeks ago, hitting a three-year high, but Goldman Sachs says Brent crude will return to $ 60 a barrel by 2020.
Goldman Sachs believes that the oil market is already in equilibrium between supply and demand, six months earlier than expected. It pointed out that the demand for oil might reach 1.6 million barrels per day in the coming year. It stressed that economic growth around the world means that consumption may be stronger.
The US bank has increased its forecast for growth in demand for oil this year to reach 1.86 million barrels per day compared to the previous estimates of 1.73 million barrels per day.
ExxonMobil ( American multinational oil and gas corporation) said, "Its oil and gas reserves jumped 19 percent last year thanks to growth in the United States, the UAE and Guyana."
The update of reserve data, which is required annually by US regulators, comes when Exxon worries about its potential growth and spending after it posted a quarterly profit below expectations.
Exxon added 2.7 billion barrels of oil equivalent to its proven reserves last year, bringing the total reserves to 21.2 billion barrels. Confirmed reserves are those that are economically and geographically feasible for production in the near future.
Darren Woods (the Chief Executive Officer of Exxon Mobil) said, "ExxonMobil's portfolio of development opportunities puts us in a position to maximize shareholder value as we bring in new supplies of oil and natural gas to meet growing demand."
In Texas (where Exxon's headquarter id located), the company paid more than $ 6 billion last year to double its stake in the Permian Basin, the largest oilfield in the United States. It noted that the agreement for rock oil added more than 800 million barrels of oil equivalent to the reserves.
In the UAE, Exxon added another 800 million barrels of oil equivalent to its operating reserves in the Upper Zakum field.
In Guyana (where Exxon, Hess and other partners have not pumped oil so far), Exxon and its partners have found recoverable resources estimated at 3.2 billion barrels of oil equivalent, including proven reserves and other resources.
