“International crude oil prices have recovered remarkably in recent weeks”, it said.
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Over the weekend, Iran’s oil minister said the country wouldn’t join a production freeze until its own output rose to 4 million barrels a day, according to published reports. But it also noted a sharp slowdown in demand growth, particularly in the United States and China.
Oil prices have crashed from highs of more than $100 per barrel in mid-2014 to as low as $27 in January, wiping out more than 70% of its value.
As we showed in this article in February, shale oil production is crashing and more than 60 oil and gas producers have already filed for bankruptcy, with another 150 reported to be on their way.
“There are clear signs that market forces… are working their magic and higher-cost producers are cutting output”, the Paris-based IEA said.
“When we put it all together, it suggests WTI will struggle to break $45 in the front”, the analysts wrote in a note to clients.
Oil prices inched into the red today as oversupply concerns trumped increasing optimism that the market had likely reached a bottom.
“The revenue from oil for Iran would be much higher even if they agree on freezing production at the current level rather than having no agreement which would keep oil prices low”, said Garbis Iradian, chief economist for Africa and Middle East at IIF.
Iran impact mutedAmong other factors keeping a lid on oil supply, Iran’s return to the market following the lifting of Western sanctions in January has been “less dramatic than the Iranians said it would be”, the IEA said.
Saudi Arabia appeared to have stuck to a preliminary deal with some other producers to freeze output, as its crude production held steady in February at 10.22 million barrels per day (bpd), an industry source told Reuters.
Production from Opec’s 13 members slipped by 90,000 barrels a day to 32.61 million a day in February as the increases in Iran were countered by declines in Iraq, Nigeria and the United Arab Emirates.
CEO Jung Sung-leep of Daewoo Shipbuilding & Marine Engineering, shared a similar view, saying, “Since many believe oil prices will rise to $50 to $60 per barrel, we expect to see stability in business from the second half of next year” at the press briefing on Thursday.
CMC Markets analyst Jasper Lawler credited the IEA’s outlook with sparking the oil price rise by calling for “a possible bottom”.
Copper, zinc and lead paced gains in London, climbing at least 1 percent.
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The IEA has also warned that a sudden increase in oil prices could hurt demand further. The field produces about 180,000 barrels per day (bpd) and is the largest contributor to the Forties crude oil stream, one of four crudes which underpin Brent.
