Libya is aiming to return output to levels last seen in 2011, when Moammar Gadhafi was ousted. The IEA reduced growth estimates for this year by 100,000 barrels a day to 1.3 million a day, citing a deceleration in China and India this quarter coupled with vanishing growth in developed economies.
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Libya has already said it won’t cut production.
“(An output freeze) would only secure an even higher push of Saudi crude oil and would be a case where the proposed cure is worse than the disease”, said Olivier Jakob, managing director of PetroMatrix in Switzerland.
Internal fighting between pro-government forces and a Libya militia that has taken control of oil ports resumed on Sunday. It halted the loading of oil from the port of Ras Lanuf.
The commodity plunged last week on supply glut worries but bounced slightly Monday after OPEC member Venezuela said a deal to limit output was close. Members are close to reaching an agreement, Venezuelan President Nicolas Maduro said after speaking to his counterparts from Ecuador and Iran.
Oil prices also reacted to comments made by Venezuela’s Oil Minister Eulogio Del Pino on September 19 that global oil supply of 94 MMbbl/d needs to fall by about a tenth if it is to match consumption.
Oil prices have been under pressure since their June 2014 highs due to an excess of supply around the world. Eulogio Del Pino, Venezuela’s oil minister, commented on September 19 that the global oil supply has to fall 10% for the production-consumption balance in the market.
But as noon approached, short-covering and fresh buying emerged from those fearing of a rally should OPEC announce a deal in Algeria.
Oil producers are to meet on the sidelines of an industry conference in Algeria next week for talks on potentially freezing oil production, ahead of OPEC’s all-important policy meeting in November.
“It is an informal meeting, it is not a decision-making meeting”, he said, dampening hopes that any agreement could be reached to cap production in order to boost prices.
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“It seems there are more barrels than ever coming to the market because of OPEC and there should be no fundamental reason for prices to go up”, said Scott Shelton, broker with ICAP in Durham, North Carolina.
