There’s Fi­nally Some Good News for Oil Mar­ket

The Economic Times - - Commodities Plus -

New York: We’re fi­nally see­ing a glim­mer of good news for oil: global pro­duc­tion has started to slow down.

In a re­cent note to clients, Credit Suisse’s Ed West­lake and Jan Stu­art shared a few charts show­ing that global pro­duc­tion ex-Saudi Ara­bia fi­nally started slow­ing in 2015.

Ac­cord­ing to data cited in their charts, global oil pro­duc­tion has slowed to ap­prox­i­mately 83 mil­lion bar­rels per day in 2016, from about 84 mil­lion in mid-2015.

“Pro­duc­tion clearly is not re­silient any­where for long,” they wrote. How­ever, we should note that re­cent data from the US En­ergy In­for­ma­tion Ad­min­is­tra­tion shows that to­tal world pro­duc­tion is up to 96.27 mil­lion bar­rels per day in 2016, up from 95.76 mil­lion bpd in 2015. Data from the EIA shows that the US now pro­duces about 8.60 mil­lion bar­rels of crude oil per day in 2016, down from 9.43 mil­lion bar­rels of oil per day in 2015.

At the same time, the Credit Suisse duo notes that they ex­pect strong de­mand growth in 2016, although mod­er­ated from the pace in 2015. “2015 was a good year for global oil de­mand growth. And de­spite a win­ter slow­down (driven by re­duced diesel and heat­ing oil con­sump­tion) we ex­pect the trend of healthy growth to con­tinue through 2016 — we see 1.5% ver­sus 1.8% last year,” they ar­gued.

No­tably, West Texas In­ter­me­di­ate crude oil fu­tures in New York touched a 2016 high of $42.25 on Tues­day af­ter re­ports that Saudi Ara­bia and Rus­sia had agreed to freeze pro­duc­tion, and ahead of Sun­day’s meet­ing be­tween oil heavy­weights in Doha, Qatar. On Wed­nes­day, Rus­sia’s oil min­is­ter, Alexander No­vak, con­firmed he held pro­duc­tion-freeze talks with Saudi Ara­bia’s oil min­is­ter, Ali al-Naimi. “Now I do not want to com­ment pre­ma­turely on what will be dis­cussed on April 17 in Doha. Let’s wait for the con­sul­ta­tions,” No­vak told the Rus­sian news agency TASS.

“The talks were held on Wed­nes­day, this is a fact, but I will not an­nounce the de­ci­sion be­fore­hand.” — Busi­ness In­sider

Elena Holodny ANIMISHA

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