Oil supply from the United States, Russia and other countries outside of OPEC is expected to drop sharply next year as a result of extreme low prices, the International Energy Agency (IEA) forecast past week.
In its latest monthly report, the IEA said non-OPEC production is expected to drop nearly half a million barrels to 57.7 million barrels a day in 2016. The agency also forecasted that a global oil demand would rise to 1.7 million barrels a day this year, the highest in five years, and grow by another 1.4 million in 2016.
The US Energy Department is expecting US oil to average $49 per barrel this year and $54 per barrel in 2016.
Since the beginning of the year oil prices fell more than 15.0% and is holding at a weekly resistance. Last week crude oil fell but with a narrow range week and close in the red near the low of the week, creating an inside week. The commodity is still in a well establish bearish phase and the stochastic is showing a bullish momentum although is still below the 50 mid line.
Expecting an upward move to a key level at 54.42 on a break above previous week high at 46.38 (scenario 1) or a break below previous week low at 43.35 could push oil prices to year low at 37.74 (scenario 2).
LCrude is a CFD written over Light Crude futures.