Oil Stability

By Isaac Cohen*

Oil prices have remained within a mid-range band of between $40 and $50 per barrel, for the last six months, after falling to a 13 year low of less than $30 at the start of this year, from over $100 a barrel in 2015. Several factors are contributing to present stability and among them stands out the fact that according to the International Energy Agency “demand growth is slowing and supply is rising.” (http://www.iea.org/newsroomandevents/news/2016/september/iea-releases-oil-market-report-for-september.html)

Last week, in Paris, the Agency released the monthly Oil Market Report, which presents its view on the state of the international oil market, including supply and demand projections for the next 18 months.

Demand weakness originates in the giant emerging market economies of China and India, while consumption has slowed down in advanced economies such as Europe and the United States. On the supply side, high cost oil production has been reduced in the United States by almost 500,000 barrels per day, as evidenced by the number of active drilling rigs, which in September reached 508, down 340 from last year.

However, this reduction in production has been more than compensated by increases among low cost producers, such as Iraq, Iran, Kuwait and Saudi Arabia. The case of Iran is noteworthy, because with exports of 2.2 million barrels per day, it has reached the level of exports attained before effective international sanctions were imposed in 2012.

In these conditions, the International Energy Agency projects that oil supply will “continue to outpace demand at least through the first half of next year.”

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.

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About Ramón Jiménez

Ramón Jiménez, actual Managing Editor de MetroLatinoUSA. Periodista que cubre eventos de las comunidades latinas en Washington D.C., Maryland y Virginia. Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia. Galardonado en numerosas ocasiones por parte de la Asociación Nacional de Publicaciones Hispanas (NAHP) y otras organizaciones comunitarias y deportivas de la región metropolitana de esta capital. También premiado en dos ocasiones como Mejor Periodista del Año por la cobertura de la comunidad salvadoreña; premios otorgados por la Oficina de Asuntos Latinos del Alcalde de Washington (OLA) y otras organizaciones. Ha sido miembro del jurado calificador en diferentes concursos literarios, de belleza y talento en la región metropolitana. Ha visitado zonas de desastre en Nicaragua, Honduras y El Salvador e invitado a esos países por organizaciones que asisten a personas de escasos recursos económicos. Antes trabajó en otros medios de prensa de Virginia y Washington, D.C., incluyendo reportajes para una agencia noticiosa mundial.

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