The oil price could face further downward pressure as a warmer winter is expected to hit demand further, the supplier of about 40 percent of the world’s oil warned.
Official forecasts expect heating degree days in the U.S. to be 12 percent lower than last winter, implying lower demand, the Organization of Petroleum Exporting Countries (OPEC) said in its monthly oil market report as Brent traded close to a four-year low.
Brent crude fell below $90 on Friday, as supply rises and markets digested more grim economic news, with analysts now slashing their oil price forecasts.
The free fall in the oil price has increased pressure on OPEC members to take action to cut supply, which analysts said is unlikely before its meeting at the end of November. But Saudi Arabia has shown reluctance to cut production at the risk of losing market share to other countries.
Head of analysis at Lloyd’s List Intelligence, Neil Atkinson said Brent’s new range would lie between $75-$90 per barrel, comparing current market conditions to that of 1986 when OPEC was forced to drastically cut production.
“In 2014 the debate is once again about what OPEC will do to put a floor under price. But circumstances have changed. Today, only Saudi Arabia has any significant scope to cut production. In 1986 all members did,” he said.
“With economic growth weakening and oil demand following suit alongside rising global oil supply there is only one way for prices and that is down,” he added.