Citing OPEC sources and delegates, Reuters reports Tuesday that a cut in production is very unlikely at OPEC’s next meeting in June even if prices remain extremely low, as it will be too early to say how fast Iranian output is rising.
Oil prices have dropped below $37 a barrel after an industry report highlighted an increase in crude inventories in the U.S. countered output freeze plan by major oil producers. Oil prices are near 11-year lows at around $37 a barrel.
“With transportation and gasoline demand decelerating, especially in China… product builds and exports could lead to weaker refining margins globally and less crude demand”, the bank said.
Money managers raised their combined net long position in crude futures and options in NY and London by almost 16 percent for the week ended February 23, data by the U.S. Commodity Futures Trading Commission (CFTC) showed.
Oil prices jumped 3 percent on Monday after China moved to boost its slowing economy and Saudi Arabia pledged to work with other crude producers to limit market volatility, developments that fed hopes the oil selloff would end.
Nigeria’s crude oil production fell by 139,000 bpd to 1.9 MMbpd in February 2016. United States supplies probably rose by 2.75 million barrels last week, according to a separate Bloomberg survey before Energy Information Administration data Wednesday. “The price action in oil adds to the case that the bottom in the crude oil market is now in place”. The reason for this anticipation is Iran’s oil production strategy, as the pace of increase in the country’s production rate is now uncertain. Eurostat, the statistics office for the European Union, reported inflation turned negative in February after a gain of 0.3 percent the previous month.
Oil began to sell off in mid-2014 when a global supply glut from excessive US shale crude production began to pressure prices at above $100 a barrel.
Saudi Arabia and Russian Federation have not said the output freeze would be void if Iran refuses to join in, leaving room for a potential compromise.
Analysts said that the declines were the result of USA crude inventories surging to a new record that outweighed the bullish sentiment taking hold of the market. OPEC sources, according to Reuters, disclosed that the group is hesitant to cut production until it receives more clarity on Iran’s long-awaited return to global markets.