A monthly production report from the Organization of the Petroleum Exporting Countries released Monday showed the group’s output declined by less than 200,000 barrels in February.
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In spite of uncertainty about whether a production freeze will occur, and over its effectiveness given concerns about the global economy, investors have turned more friendly towards oil.
Sanctions against Iran were lifted in January and Western and Russian gas and oil companies have been keen to close deals with Iran and gain access to the country’s natural resources. Iran may join the alliance after restoring its own output to levels before sanctions were imposed, Russian Energy Minister Alexander Novak said after meeting with his Iranian counterpart.
“Russia had a very clear position about Iran’s return”, he added, “The propaganda was contrary to what he said today”. “The country could join the freeze later”.
Saudi Arabia, Russia, Venezuela and Qatar in February proposed an accord to cap oil output and reduce a worldwide surplus.
Speaking of $40, that’s an area where we would anticipate seeing quite a bit of resistance due to the fact that the U.S. shale oil producers will start throwing quite a bit of supply into the market at the $40 handle.
Oil will probably end the year at $45 to $50 a barrel, Novak told reporters. Even with sanctions imposed, this OPEC member produced some 2.8 million barrels a day in 2015 and is looking to go as high as 4 million before taking its place at the negotiations table.
Brent settled down 79 cents at $38.74 a barrel, a 2 percent drop similar to Monday’s.
WTI Crude OilDuring the day on Monday, the WTI Crude Oil market initially trying to rally, but found far too much resistance above and we fell significantly, losing over 4%.
Oil fell 3 per cent on Tuesday, extending losses for a second straight day, as market participants cited technical resistance after prices ran above $40 a barrel and worry that United States crude stockpiles had continued to rise despite falling production.
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Novak also pushed off until April a meeting with top OPEC producers that had been expected on March 20.
