Oil Prices Rebound as IEA Talks Down Supply Glut Fears
- Oil prices rose by 5% after comments from the Saudi Arabian Oil minister on the Sept. 26 meeting
- International Energy Agency report suggest oil demand is expected to slow in 2nd half of 2016
- Saudi Arabia’s Oil Minister expects to discuss price stability measures with Non-OPEC nations
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Crude oil prices rose over 5 percent Thursday following comments from the Saudi Arabian Oil Minister and a report on demand forecasts from the International Energy Agency (IEA). In a statement through the session, Saudi Arabia’s oil Minister Khalid al-Falih said that price stability action would be discussed at an informal meeting in Algeria on September 26-28. The meeting is set to bring together OPEC and Non-OPEC countries to discuss policies, however a number of previous meetings have failed to produce any cooperation or coordination. Check out Currency Strategist Ilya Spivak’s commodity report on the last OPEC meeting.
Chart: Trading View
The IEA oil market report for August suggested that global crude supply would actually fall behind demand in the third quarter by nearly a million barrels. Year over year output in June was 215k barrels per day lower than the year prior. This is due to Non-OPEC producers decreasing production as historically low oil prices impact solvency. The IEA forecasts Non-OPEC production to further decrease this year by 0.9 million bpd. Cooling some of the optimism looking forward, the group projected a drop in demand for 2017 on a downgrade growth forecasts.
The IEA report also noted the “robust Middle East oil production” in July, led by Saudi Arabia which recorded its highest output ever. Countries like Iran and Iraq continued to pump more in the month of July as well.
Earlier this week, oil prices fell while the Department of Energy’s weekly petroleum status report showed inventories rose more than analyst expectations. Earlier in the week, Venezuelan President Nicolas Maduro announced he was attempting to promote a supply meeting with OPEC and key non-OPEC producers to buoy global oil prices.
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