Producers are struggling with low oil prices and an oversupplied market but have been loath to cede market share by cutting output.
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“The freeze talks between Opec and non-Opec will decide how quickly markets could get balanced and by how much oil prices would rise”, Natixis analyst Abhishek Deshpande said.
North American markets were modestly lower near the end of the trading week Friday as energy prices retreated in advance of a weekend meeting of OPEC countries to discuss ways of ending the global oil glut.
Just days before OPEC members will meet to discuss a production freeze the group has trimmed its 2016 global demand forecast.
Certainly, countries like Kazakhstan-the economies of which are overly reliant on oil revenues-want prices at more than $50 per barrel.
“There is hope” that producers will reach an agreement in Doha, Dmitry Peskov, the Kremlin’s press secretary, said following the latest conversation between Russian Energy Minister Alexander Novak and his Saudi counterpart.
Specifically, the IEA projects oil stocks to expand by 1.5 million barrels per day in the first six months of 2016 and then slow to 200,000 barrel per day in the second half of the year due to a drop in high-cost production, like USA shale oil. The share price of $9.26 is at a distance of 20.73 percent from its 52-week low and down -56.9 percent versus its peak.
Prices came under pressure earlier in the session, falling more than 2 percent after comments by Saudi Oil Minister Ali al-Naimi in the al-Hayat newspaper that confirmed his country’s position that an outright production cut was out of the question.
The IEA and OPEC both released their monthly oil market reports this week.
“Iran supports efforts.to stabilize the market and support prices”, oil ministry spokesman Akbar Nematollahi was quoted as saying.
Opec said its members pumped 32.25-million barrels a day in March – with Saudi Arabia accounting for almost a third – up from an average of 31.85-million barrels a day in 2015. India is close to surpassing China as “the main engine of global demand growth”, according to the agency.
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Iran is believed unlikely to join any freeze until its production returns to levels prior to nuclear related sanctions, which were lifted in January. West Texas Intermediate was down 2.79% to $40.37 a barrel while Brent crude was 2.26% lower at $42.87. In particular, Saudi Arabia, Iran’s geopolitical rival in the Middle East, has said its own participation in the freeze would require the inclusion of Iran. Production outside the Organization of Petroleum Exporting Countries will decline by the most since 1992 as the US shale oil boom falters.
