Meanwhile, futures contracts for the West Texas Intermediate benchmark crude used in the United States and Canada were trading at US$38.59 and higher this morning.
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Oil prices hit their lowest since 2003, below $30 per barrel, in January on a supply glut stemming from booming USA output in recent years and a decision by OPEC to ramp up supply to fight for market share against higher-cost producers.
The IEA released its monthly oil market report Friday.
While the IEA struck a reasonably optimistic tone in the report, it wasn’t all smiles, and urged caution on oil’s potential recovery, saying that the recent recovery shouldn’t “be taken as a definitive sign that the worst is necessarily over”, when it comes to oil. “The market’s been hoping that there will be some kind of deal being reached between OPEC and non-OPEC countries”.
A meeting between Latin American oil producers to unify the region in backing an output freeze or other measures to bolster prices has been postponed from Friday due to scheduling difficulties, Ecuador’s oil minister said.
Production in Organization of Petroleum Exporting Countries and outside the cartel fell in February, according to the agency. WTI had also been above US$100 a barrel at the peak in mid-2014. But IEA data show Iran’s production increased by just 220,000 barrels a day in February.
The report also argued that there’s still a long way to go before balance returns to the markets, but said that balance should return during 2017, although the agency “cannot be precisely sure when in 2017 the oil market will achieve the much-desired balance”, it said.
The idea of freezing output surfaced in discussions led by Saudi Arabia and Russian Federation in February after an increase in global production January added to the supply glut. Demand is under pressure because of the uncertainty in global economy, China’s slowdown, and the stronger dollar.
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This week marked a turning point for oil prices.
