 "oil, crude,")
After trading below $30 per barrel for some time in January, price of crude oil is back to around $50 per barrel and without any cut or freeze in production. Although there have been meetings galore to take a call on production freeze to prop up prices, they have all been in vain. Today’s meet is not likely to be any different either.
Many brokerage houses, including Barclays and Energy Aspects, say crude oil prices are likely to rise to around $60 per barrel by FY17-end. In a recent interview, Amrita Sen, chief oil analyst of Energy Aspects, said she is bullish on crude and expects crude oil price to rise to $60 per barrel in the fourth quarter of FY17 on the back of declining production in countries such as Angola, Nigeria and Venezuela, which are part of the OPEC.
Despite this, OPEC production rose to 32.6 million barrels per day in April, as per third-party estimates collected by Energy Aspects. Its own estimates suggest a 0.32 million barrels per day increase month-on-month to 32.17 million barrels per day.
Meanwhile, the story in the United States is quite different. According to Energy Aspects, US crude production fell month-on-month for the sixth consecutive month in March to 9.13 million barrels per day. This was lower year-on-year by 0.52 million barrels per day.
OPEC production had averaged 32.35 mb/d in March, declining m-o-m by 30 thousand b/d.
According to the International Energy Agency (IEA), global oil supplies rose 250 kb/d in April m-o-m to 96.2 mb/d due to higher OPEC output offsetting non-OPEC declines.
There is a view believed to be supported by Saudi Arabia that maintaining production at current levels is driving out competition. According to a CNNMoney report, a Gulf-based state energy company believes it would be a mistake to cut output to boost prices because a rise above $50 per barrel will encourage US shale producers and deep water projects in Latin America and Africa back into the market.
On the other hand, demand too is rising, which is helping rebalance the oil market. "From the beginning of the year until now, the market has been correcting itself upward," UAE Oil Minister Suhail Al Mazrouei told reporters in Vienna on Tuesday. "The market will fix itself to a price that is fair to the consumers and to the producers." His Nigerian counterpart too echoed the same sentiment. Though as far as Nigeria goes, this bout of optimism is rather welcoming considering that this year has knocked around 800,000 barrels off its daily oil production. But a part of the fall in production in the African nation can also be due to constant militant woes in the region.
IEA’s Oil Market Report for May revised global oil demand growth for the first quarter of 2016 upwards to 1.4 mb/d, on the back of strong gains in India, China and Russia. For the year as a whole, it expects growth to be around 1.2 mb/d, with demand reaching 95.9 mb/d.
