(MENAFN- ProactiveInvestors - UK) There was short lived jubilation on the oil market this week as Brent crude almost hit US$50 a barrel with many energy commentators claiming the worst was over.
Reality was quickly restored when the Federal Reserve hinted at an upward move in interest rates and a surprise increase in US crude inventories also woke the market.
In early trading on Friday, both benchmarks were still holding strong, above US$48 a barrel.
In recent weeks, the headlines have talked of production declines, particularly in the US and Canada, spurred on by geopolitical issues in OPEC countries and some production outages.
While supply may be lower from some countries, there's healthy supply coming from many Gulf players with no expectation of any decline in production.
The fundamentals of the market may be shifting slightly, but the global oil market remains more than adequately supplied.
Kuwait pumping without interruption
One OPEC member pumping without interruption this week is Kuwait and the country's deputy premier, minister of finance and acting oil minister, Anas Al-Saleh says the recent strategy by OPEC to grow market share is 'working well'.
He sees the oil price edging back to US$50 a barrel as demand is picking up.
'The end of 2016 should be the balancing of markets between demand and supply.'
Despite a stalemate at the recent Doha meeting, Al-Saleh complimented the fact that so many OPEC and non-OPEC players came together freely to engage in an open dialogue.
The minister told Bloomberg TV that his country has adequate financial capacity to respond to the fall in oil price as the country embarks on a programme of economic diversity and budgetary reform in the coming 5 years.
He said the country was 'investing heavily' in the energy sector as current production is now estimated above 3 million barrels a day and poised to increase in years to 2020.
Fed impacted the oil price
The surprise announcement of a possible June US interest rate by the Federal Reserve spooked the market this week, causing equities to fall as stocks sold off around the world and the dollar gained strength.
Naturally this impacted the oil price to the low side and while the key players at the Fed may feel the economy is ready for a hike, some analysts say its too early.
The president of Prestige Economics, Jason Schenker warned that American growth rates remain weak and he says he remains 'concerned that US rate hikes will hasten the onset of a recession, given the spreading segments of the US economy that appear to already be in recession.'
We're hearing tough talk from American energy advisors this week as the former director of National Intelligence and head of the Navy's Pacific command, Dennis Blair called on Congress to consider a special commission to challenge what he calls 'OPEC's market manipulation.'
Making it clear that "the American oil shale revolution has not fundamentally changed this dependence on other countries," Blair said his government needs to take action to protect its energy industry as the country remains "subject to economic harm whichever way the prices go."
He made it clear that the achievements of the shale oil industry in the US cannot be realised unless OPEC's power is curbed.
He suggests that an American commission should confront OPEC members to become more transparent and to support free market principles.
Two weeks till Vienna OPEC meeting
With only 2 weeks until ministers meet in Vienna for OPEC's first gathering of 2016, many energy analysts feel the organisation will leave production unchanged at current levels.
This will be the first meeting for Saudi Arabia's new energy minister and Kuwait and Iraq will also have new ministers attending this meeting.
Talk of a production freeze may come back to the agenda, but the projected strength in future oil demand as well as declining non-OPEC production will most likely be the key influencing factors on any decision.
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