Friday, March 11, 2016

Brent crude climbs as International Energy Agency says oil may have bottomed out

From @TheGuardian -- Crude prices and commodity companies are climbing after the International Energy Agency said oil may have bottomed.

The organisation, which coordinates energy policies of industrialised countries, said output from non-Opec countries was beginning to fall quickly and production from Iran - which has only just returned to the export market following the lifting of sanctions - was not dramatic.

It now believes non-Opec production would fall by 750,000 barrels a day this year compared to earlier forecasts of a 600,000 decline, with US output down by 530,000.

Output from Opec countries fell by 90,000 barrels a day in February due to production problems in Nigeria, Iraq and the United Arab Emirates.

Iran has been less than keen to join a proposed freeze of output at January levels, preferring to increase output now it is back on world markets. Brent crude fell on Thursday after suggestions that a meeting in Russia to discuss curbing the supply glut had been cancelled because of Iran’s position. But the IEA said: "Iran’s return to the market has been less dramatic than the Iranians said it would be: in February we believe that production increased by 220,000 barrels a day and, provisionally, it appears that Iran’s return will be gradual." .

On the overall position it added: "There are clear signs that market forces are working their magic and higher-cost producers are cutting output... For prices there may be light at the end of what has been a long, dark tunnel but we cannot be precisely sure when in 2017 the oil market will achieve the much desired balance. It is clear that the current direction of travel is the correct one, although with a long way to go.". Just a month ago the IEA warned the global oil glut was set to worsen.


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