The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Meanwhile, Reuters reports that oil prices fell on Monday as the chances of Middle East producers agreeing to curb overproduction appeared to fade, while stubbornly high U.S. output and worries about Asia’s economic outlook also dragged on prices.
Iran, returning to global oil markets after sanctions against it were lifted in January, said it would continue increasing its oil production and exports until it reaches the market position it enjoyed before the imposition of sanctions, according to a media report.
This makes a proposed deal by major producers to restrict ballooning output unlikely as top exporter Saudi Arabia said last week it would only participate if its rival Iran also took part.
U.S. crude futures CLc1 were at $36.33 per barrel at 0700 GMT, down 1.25 percent or 46 cents from their last settlement, while Brent crude LCOc1 was down 1 percent or 40 cents at $38.27. A global glut has pulled down oil prices by as much as 70 percent since 2014.
“Macroeconomic concerns and high petroleum inventories are the oil market’s ball and chain and are likely to keep the oil price between the mid-$30s and low $40s in Q2,” Barclays said.
While some analysts expect a recent weakening of the U.S. dollar .DXY to spur demand for oil from importers holding other currencies, Morgan Stanley said “negative oil headlines, producer hedging at higher prices and bloated inventories” indicate any upside in prices will be limited.
Adding to concerns of a global glut is U.S. production remains high despite steep cuts in drilling for new reserves as well as a jump in bankruptcies.
“The U.S. oil rig count dropped further this week, with a total 10 rigs idled,” Goldman Sachs said. “The current rig count implies U.S. production … would decrease by 705,000 barrels per day yoy (year-on-year) on average in 2016, and by 375,000 barrels per day yoy in 2017,” it added.
So far, U.S. production remains stubbornly high, at over 9 million barrels per day.
Despite a pick-up in recent economic data, including from India and China, analysts also poured cold water on hopes that Asia’s economic prospects were improving.
“Asia continues to face a structural growth problem – one that will not be cured in the space of a few, short months,” said HSBC’s Frederic Neumann.
Given a growing belief that prices might not recover by much any time soon, hedge funds have cut their net long positions in U.S. crude for the first time in six weeks.
The chief executive of the Abu Dhabi National Oil Company said oil markets would only start to rebalance in 2016 and 2017.