U.S. Treasury yields rose in choppy trading as investors bet the U.S. economy was healthy enough for the Federal Reserve to raise interest rates this year. In the past week, a number of financial institutions have come out to argue that the recent recovery in the price of oil will not last, and the commodity will stay weak in the long term. While there are indeed no guarantees that this trend will continue, the IEA report points to the data showing that long-term market forces are expected to continue to lead the rebound in oil, notwithstanding the short-term production restraint initiatives implemented by high-cost producers.
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Brent rose 41 cents, or 1 per cent, to $40.46 a barrel, while U.S. crude was up 80 cents, or 2 per cent, at $38.64.
United States production is forecast to decline by 530,000 bpd this year, it said.
The country then said it would reclaim its position in the world oil market, regardless of oversupply.
However, IEA is optimistic that plans by OPEC and non-OPEC countries on freezing output would affect oil prices going forward.
The time and date of a meeting among major producers remains uncertain, Russian Energy Minister Alexander Novak said Wednesday, according to a report from Interfax. The bank said it expects oil to trade in a range of $25 to $45 per barrel in the second quarter of this year, compared with $20 to $40 barrels in the first.
The International Energy Agency said in a monthly report that oil might have bottomed, and that low prices were beginning to impact crude output outside producer organisation Opec. Supplies from non-OPEC producers will decline by 750,000 barrels a day this year, or 150,000 barrels a day more than estimated last month, the agency said.
Goldman Sachs said on Friday that production is unlikely to increase in the USA until 2017, and that prices could volatile in the next few months. Iranian production was also coming onstream more slowly than Tehran had claimed, the IEA said.
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The contango is intimately connected with perceptions about the current and future balance between supply, demand, inventories and storage ( ” Brent contango is hard to square with missing barrels ” , Reuters, March 9). INDIA SUPPORTS DEMAND GROWTH The IEA kept its estimate for 2016 growth in global oil demand unchanged at 1.17 million bpd, or 1.2 percent of the total 95.8 million bpd.
