The unseasonably warm weather in the northern hemisphere took its toll on oil prices in the first week of December, shaving more than $1.0 a barrel off end-November levels. Prices have softened because crude oil and product supplies are plentiful while demand for distillates, especially heating oil, is below expectations.
Oil production has surged over the past 12 months and will average about 1.1 million barrels a day (b/d) more in the fourth quarter than at the same time last year. Most of the additional output is due to an increase in non-OPEC production, according to the Paris-based International Energy Agency. The agency forecasts that non-OPEC oil supplies will rise by at least 500,000 b/d in 1995 to 41.7 million b/d after a 700,000 b/d increase this year.
OPEC production is still running above quota. Industry estimates for average OPEC output in November range from 24.92 million b/d to 25.1 million b/d. Most of the extra production is attributed to increases in Iran and Venezuela. Production in Nigeria was down due to technical problems and Qatari supplies were boosted by about 70,000 b/d after the completion of essential maintenance. The OPEC production ceiling, which is to apply for the whole of 1995, is 24.52 million b/d.