on Monday the price of Brent crude oil
dropped to its lowest level in more than
a decade surpassing even the lows
reached during the depth of the
financial crisis it's currently trading
at $36 a barrel down more than 70
percent in the past 18 months well the
answer to that question is a seemingly
relentless surge in production from OPEC
and non-opec producers Goldman Sachs
possibly the most influential banking
commodity markets reckons supply
outstripped demand by 1.5 million
barrels a day in the fourth quarter of
this year all ominously Goldman believes
the market will remain significantly
over supplied in 2016 as output
production remains high and demand
growth softens as the impact of lower
prices at the petrol pump for example
wane the market may also have to contend
with the possibility of increased
production from Iran if sanctions linked
to its nuclear program are lifted this
could add more than 500 thousand barrels
a day to the market and perhaps even
more said against that leading
forecasters such as the International
Energy Agency do expect a decline in non
Oprah production next year it reckons
supply could fall by as much as 600,000
barrels a day as the impact of lower
prices starts to impact activity
particularly in the US shale industry
it's possible then that prices could
pick up in the second half of next year
from their current depressed levels but
March will depend on production levels
and no one should expect Oprah to cut
supply at its last meeting earlier this
month the cartel resisted all calls for
production restraint and vowed to keep
on pumping intensifying a battle for
market share so as we look to 2016 the
adjustment in the oil market is going to
have to come from outside of OPEC and
that might require even lower prices to
force producers who are currently
hanging on by their fingernails out of
the market goldman reckons prices
could have to go as low as $20 a barrel
a scenario few people are now
discounting