At first, this was blamed on a production glut, but as concerns about global economic growth set in, this dampened expectations even further.
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While shale drilling in the U.S.is on the rise again, prices need to climb nearer to $60 a barrel for USA producers to have a “substantial” boost in activity, the International Energy Agency said.
Last week, US drillers added oil rigs for a sixth consecutive week, according to a Baker Hughes report, as producers continued boosting spending on expectations for higher prices in the future. Oil prices retreated after reports of a new OPEC meeting sparked an overnight rally.
Talk of another oil summit, this time in Algeria, helped rebound oil prices on Tuesday but these quickly plummeted once it emerged that there was infighting between OPEC members, with some saying holding such meetings was futile given Iran’s additional production numbers, in addition to the Saudis pumping oil at record levels. Kohl’s also fell, shedding $1.14, or 2.9 percent, to $38.23.
From July through September, global production of crude oil will fall behind demand by nearly 1 million barrels a day, said the International Energy Agency, a Paris-based agency that monitors energy trends for oil-consuming nations. WTI crude oil closed 21.5% below its peak in June and therefore met the conditions for the standard definition of a bear market.
The agency trimmed forecasts for world oil demand growth in 2017 by 100,000 barrels a day because of a “dimmer macroeconomic outlook”, projecting that consumption will expand by 1.2 million barrels a day to average 97.5 million a day.
Holding an informal meeting is an opportunistic, low-risk strategy for OPEC to deal with the problem of falling prices, said David Fyfe, the head of research at oil trading house Gunvor Group in Geneva.
He added that, since February of this year, the oil price had experienced a steady improvement following a decline in crude oil production, supply outages and a decrease in oil inventories, while the global demand for oil improved in that period.
Meanwhile, output by Saudi Arabia, the world’s largest exporter of oil, reached a high last month, as part of a broader ramp-up by the Organization of the Petroleum Exporting Countries, according to OPEC data published Wednesday.
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The last time OPEC and other oil exporting countries discussed an output freeze was in April when the members met in Doha. Brent crude, used to price global oils, lost 53 cents at $44.86 per barrel in London. The news came a day after China reported another fall in exports for the month of July as weak global demand hampered efforts to shore up Chinese trade.
