Brent crude, the global oil benchmark, rose 0.8% to $47.19 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.8% at $43.56 a barrel. The market found some support in the API data which showed that inventories at the key trading hub of Cushing, Okla., fell 750,000 barrels last week. Still, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years, according to the EIA. Analysts say one of the reasons for the growing stockpiles is refineries are buying less of the raw material as they undergo routine maintenance in the fall.
As a year of deep cuts in exploration and production amid an oil glut draws to a close, the oil industry is facing the contradictory possibility of a crude shortage, Georgi Kantchev and Bill Spindle report. “A big gap is forming in oil-industry investment,” said Claudio Descalzi, chief executive of Italian energy company Eni SpA. “That will lead in two to three years to an imbalance between supply and demand that will push prices higher.”
Global exploration-and-production investment is expected to have fallen by $170 billion, or 20%, this year, and investment could fall by one-fifth next year if oil prices average $50 a barrel. That would be the first time the industry has registered two straight years of investment drops in 30 years. The oil industry needs to replace 34 billion barrels of crude every year to satisfy expected consumption growth, but decisions for only eight billion barrels were made in 2015.
“The stage is set for a supply crunch down the line,” said Miswin Mahesh, an oil analyst at Barclays. “Supply from existing fields will fall, while new projects won’t come online to replace them.”
The supply of U.S. crude on the world market, however, will rise after the lifting of a 40-year ban, and ConocoPhillips and NuStar Energy LP are ready, Lynn Cook and Erin Ailworth report. Both plan to finish loading what will be the first tanker of freely traded U.S. crude oil in four decades, and the first shipment could sail from a NuStar dock in Texas as early as New Year’s Eve.
Oil prices threw economic forecasts for the biggest loop of the year, Josh Zumbrun reports. As Saudi Arabia tackles the low prices with economic reforms, its stock exchange plans to sell shares in an initial public offering in 2018, Ahmed Al Omran reports. But the country won’t alter its current oil-production policy.
Oman’s cabinet approved in principle fuel-subsidy reforms and spending cuts to deal with low oil prices, Reuters reports.