The price of a barrel of Brent crude was about 0.5% down at US$49.66 while United States light crude was also 0.5% off at US$48.85.
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While that’s still only half of what crude fetched as late as two years ago, it’s a gain of nearly 90 percent since January. And there are promises of further increases.
“We would expect that once prices get to around in the $60 range or so, that six, nine, 12 months after that, we’ll see USA production start to rebound”, Bordoff said.
According to media reports, a Nigerian oil technocrat and former head of the Nigerian National Petroleum Corporation (NNPC), Mohammed Sanusi Barkindo, is a front runner in the race to become the next secretary general of the Organisation of Petroleum Exporting Countries (OPEC).
Ironically, part of the credit for OPEC’s improving fortunes is due to its inability to act in unity in recent years. Some have gone out of business, reducing the glut of global supply.
Zanganeh said a production cap would be “no benefit” for Iran – or for the other members of the cartel, which pumps around a third of the world’s oil.
Ahead of the closely-monitored meeting in Vienna, which is scheduled to begin at 0800 GMT, several delegates said the group could discuss a production ceiling, an idea that Saudi Arabia is considering backing.
After OPEC scrapped its production ceiling in December, oil prices descended to 13-year lows within weeks.
We do think that the days of output, individual production, it is unlikely to happen in the near term but I think that what the market may want to have a feel of Iranian production is and also to what extent Iraq production can increase.
The $50 2016 all-time high is as a result of production outages in Canada occasioned by forest fire and militants’ disruption of Nigeria’s oil sector.
Some countries whose economies are in crisis due to the prolonged slump in the cost of oil, such as Venezuela, hope a production freeze can be agreed by Opec in an effort to bolster prices.
Iranian Petroleum Minister Bijan Zangeneh said Wednesday that the main goal was to determine the quotas for each country, but he does not look optimistic that such an agreement can be reached.
There “isn’t a lot of energy” for a production ceiling, Nigerian energy minister Emmanuel Ibe Kachikwu said. These nations need oil nearer to the $100 mark to see any real impact.
“More than 3 million barrels are out of the market”.
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“We see no reason as to why OPEC members…would now choose to reverse policy”, said BMI Research.
