Brent Oil Isn’t Showing Signs of Recovery

Many are hoping oil demand could receive a boost from the low prices.

“I don’t think we can rely on low prices driving much incremental demand at this point”, Vitol executive member Chris Bake said at an IP Week conference.

Brent crude-oil prices are forecast to average $38 a barrel in 2016 and $50 a barrel in 2017, while Nymex crude-oil prices are expected to average the same as Brent for both years, the EIA said.

The major crude oil benchmarks, West Texas Intermediate and Brent, are trading at $30.45 and $33.26 a barrel, up on the day, but the IEA doesn’t expect such price movements to be the norm going forward. “Persistent speculation about a deal between OPEC and leading non-OPEC producers to cut output appears to be just that: speculation”, the IEA said.

Global oil supply dropped 0.2 mb/d to 96.5mb/d in January, as higher OPEC output only partly offset lower non-OPEC production.

There is also little sign of any coordination on production cuts among big producers outside the United States after weekend talks between OPEC members Saudi Arabia and Venezuela yielded no concrete result.

Freed from sanctions, Iran ramped up its production to almost 3 million barrels a day in January, up 80,000 over December.

No agreement to restrain supply has been made despite Venezuelan Oil Minister, Eulogio Del Pino, touring oil capitals from Moscow to Riyadh last week and Nigeria Petroleum Minister, Emmanuel Kachikwu’s call for an emergency meeting last month to cut the over supply. The Organization of the Petroleum Exporting Countries has revised its forecast for oil demand in 2016, predicting an increase in demand of 40,000 barrels per day, to reach 94.21 million barrels a day, the Monthly Oil Market Report.

Oil prices have fallen nearly 75% since mid-2014 as producers pump 1-million to 2-million barrels of crude every day in excess of demand, just as China’s economy grows at its lowest rate in a generation.

The Paris-based IEA, which advises oil consuming nations on energy issues, said that OPEC is now responsible for the glut of supplies hitting the market the past year.