In reporting that US production will decline by 530,000 barrels per day (bpd) and non-Organization of the Petroleum Countries (OPEC) output in general would fall by 750,000 bpd in 2016, the IEA stated that “There are clear signs that market forces… are working their magic and higher-cost producers are cutting output”.
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A final agreement on an output freeze to support oil prices, which have fallen 65 percent since peaking in June 2014 due to oversupply, is seen next month, possibly again in Doha, Novak said. However, in the wake of Iran insisting it was not ready to accept any output cuts, the debate, if the meeting would eventually take place or not, kept the markets on tenterhooks.
“Even if there is a short-term rebound in prices, the fundamentals remain unchanged”.
Meanwhile, data from China Monday showed that industrial production (http://www.marketwatch.com/story/chinese-economic-data-paint-a-gloomy-picture-2016-03-14) grew 5.4% in January and February, compared with a year earlier.
OPEC crude oil production eased by 90 kb/d in February to a still-robust 32.61 mb/d with losses from Iraq Nigeria and the United Arab Emirates partly offset by a substantial rise in flows from post-sanctions Iran.
Partly offsetting the bullish comments, Goldman Sachs lowered its crude oil price forecasts for this year and next year.
Metal prices also got a boost after China strengthened the yuan’s fixing by the most in four months.
Iran has yet to say whether it would participate in a potential pact to freeze production, Reuters reported, citing unidentified people with knowledge of the matter. “There is still too much supply so even if they decide on a freeze, production levels are still high”, he told AFP. “If we want a positive response from oil markets, we need to set up a clear agenda”, one OPEC official in the region said. It hit a three-month high of $39.02 on Friday, surging from a 12-year low of $26.05 a month earlier.
Questions over the proposed March 20 meeting emerged after Iran declined to agree to any output cap as it ramps up production following the lifting of nuclear-linked sanctions in January.
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Oil futures settled higher on Friday as US prices scored a gain of more than 7% for the week, after a top energy monitor said prices might have bottomed on expectations that falling supplies will help alleviate the global glut of crude. In fact, the influential investment bank warns the current oil rally could do more harm than good to future prices.
