The spot WTI crude oil price continued to inch up, 0.61% higher on Thursday, despite the annual World Oil Outlook published by the Organization of Petroleum Exporting Countries (OPEC) showing that the organization will cut global supply to 30.7 million barrels a day (bpd) by 2020, as it forecasts a decline in demand for its crude oil. In the report, OPEC predicts the prices of crude oil to rise to $70 a barrel in 2020 and $95 a barrel in 2040. Just last month, OPEC said its output rose by 230,100 bpd to 31.695 million bpd, due to a surge in Iraq's production, while production in Saudi Arabia slipped by 25,200 bpd to 10.13 million bpd. 

According to the Financial Times, Saudi Arabia’s state oil company cut its official selling prices to Europe and pushed sales into north Europe's refineries that have traditionally taken the majority of their supplies from Russia and the North Sea. The price war between Russia and Saudi Arabia can go on for a long time, as the cost of production per barrel of crude oil is $17.20 in Russia, compared to $9.90 in Saudi Arabia, according to data compiled by Oslo-based independent oil and gas consulting services and business intelligence data firm, Rystad Energy. Russian oil firms profits are also on the rise, spurred by weakness in the ruble.

The Energy Ministry of Russia reported that Russia produced 10.78 million bpd of crude oil in November, unchanged from the post-Soviet record high of 10.78 million in October. Maxim Oreshkin, the Russian deputy finance minister, told UK-based Telegraph earlier in the month that the country is drawing up plans based on a price band going out as far as to 2022, fluctuating between $40 to $60.

Iran’s Finance Minister Ali Tayyebnia told the Arab Times on Tuesday that Tehran was prepared to deal with the economic impact of oil prices, to even as low as $30 per barrel. The International Monetary Fund (IMF) warned that a resurgence in Iranian oil exports could push crude prices down another 5 to 15 dollars a barrel. Sanctions on Iran could be lifted as soon as January, despite that the country test-launched a medium-range ballistic missile in October, in violation of U.N. resolutions. 

Iran's Oil Minister Bijan Namdar Zanganeh said in November, at a news conference in Tehran, that Iran won’t negotiate with OPEC or seek the group’s permission before boosting oil exports by a planned 500,000 bpd once sanctions are lifted. Iran produced 2.8 million bpd of crude oil and exported 1.26 million bpd in November, according to Reuters.

Earlier in the week, the spot WTI crude oil price surged 3.89%, to close at $37.89 a barrel on Wednesday, after the U.S. Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories rose to 484.8 million barrels, down 5.9 million barrels in the week ending December 18, compared to analysts’ expectations of an inventory increase of 1.1 million barrels. 

The EIA said stockpiles at Cushing, Oklahoma, the delivery point for WTI futures and the biggest U.S. oil-storage hub for WTI futures, rose by 2.045 million barrels to 62.101 million barrels, approaching the April 17 peak level of 62.2 million barrels. Total storage capacity for the site was 71.4 million barrels as of March 31, according to the EIA.

Excluding the Strategic Petroleum Reserve (SPR) of about 695.1 million barrels, U.S. crude oil inventories remain near the peak level of 490.9 million barrels set in the week ending April 24, 2015. On Tuesday, the American Petroleum Institute (API), an industry group that represents about 400 oil and natural gas corporations, said its crude oil inventory data for the week ending December 18 showed a draw of 3.6 million barrels.

As of December 15, there are 254,885 long positions of light sweet crude oil futures, traded on the New York Mercantile Exchange (NYSE) by managed money or hedge funds, an increase of 1,744 long positions from the previous week, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC). This is compared to about 175,477 short positions, a decrease of 3,411 short positions from the previous week where light sweet crude oil contracts are traded in units of 1,000 barrels. 

Hedge funds increased their net long positions by about 5,155 contracts, the first time in 5 weeks, as they are betting on a crude oil price rebound.

From our technical viewpoint, the crude oil price just bounced off the trendline support of the descending (DES) wedge chart pattern at $34.53 a barrel, as its downtrend continues in a bearish lower low chart pattern, meaning every low (L) is lower than the previous low. In order to establish an uptrend, the crude oil price needs to break out and stay above the October high level of $50.92 per barrel. There are walls of head resistances which need to be broken first though, between $37.75 and $42.41 a barrel, that stretch out until the end of 2016.

Tom Kloza, OPIS Global Head of Energy Analysis, told CNBC that crude prices will retest the lows in late-February and March, when refineries go to maintenance, and he still thinks that prices are going to test the December 2008 level of $32.40 to $33. In that case, we could see crude prices stay underneath the 40s-level throughout 2016.