It said: “If these numbers end up being precise, and together with the marketplace already awash in oil, it’s quite hard to find out how petroleum costs can increase significantly in the short term”.
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OPEC is also not expected to make a deal with other producers to reduce ballooning output.
While collapsing rig counts and strict capital spending caused non-OPEC supply to drop by 500,000 barrels a day in January compared with the previous month, OPEC production rose to 32.6 million barrels a day, an increase of 1.7 million barrels a day. The move has led to about 2.5 million barrels per day (bpd) glut in the oil market and resulted in prices falling from nearly $115 per barrel in mid-2014 to January’s 12-year lows of $27 per barrel.
Amid the wide spread news about the readiness of some oil producers to discuss the possible production cut in order to stabilize the prices, the agreement on this is very unlikely, oil markets analyst at the U.S. research company IHS believes. Further stock-building of 300,000 barrels a day is forecast in the second half of the year.
At around 0300 GMT, US benchmark West Texas Intermediate (WTI) for March delivery was up 54 cents, or 1.93 percent, at $28.48 and Brent crude for April climbed 72 cents, or 2.37 percent, to $31.04.
“The longs got out, the shorts jumped back in and there was possibly a whole lot of hedging by producers today to sell oil at whatever low price they could”, said Scott Shelton, broker and commodities specialist with ICAP in Durham, N.C. That growth is weaker than the five-year peak of 1.6 MMbopd reached in 2015, amid slowdowns in Europe, China and the U.S.
Late last month, prices rallied briefly on speculation that Russian Federation – the largest global oil producer – and the 13-nation Organization of the Petroleum Exporting Countries cartel could discuss coordinated output cutbacks.
The US Energy Information Administration (EIA) also this week cut its 2016 world oil demand growth forecast by 180,000 bpd, with demand to hit 95.02 million bpd, up 1.24 million bpd from 2015.
The International Energy Agency has issued a blunt slap down to the so-called “oil bulls” who see an imminent rebound in prices and the market returning to a more stable supply and demand equilibrium.
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However, it pointed out that Iraqi production struck a new record last month and that there are indications Saudi Arabia has stepped up shipments. This year, non-OPEC output is expected to decline by 600,000 barrels a day, the IEA said.
