PARIS – Oil prices jumped again as a recent report from the International Energy Agency (IEA) pointed to signs of a possible market turnaround.
Earlier this month, prices rose to their highest levels in three months, stoked by factors including recent outages in Iraq, Nigeria, and the UAE; proposed new producer talks on coordinated output action; and US dollar weakness, the IEA said in its March Oil Market Report.
“International crude oil prices have recovered remarkably in recent weeks,” it said.
WTI is currently trading at $38.68/bbl, with Brent futures at $40.30/bbl. Despite their recent slides, both are up more than $2/bbl from even one week ago.
The report said the recent price increase has also been bolstered by lower OPEC and non-OPEC production. The IEA found that global oil supplies eased to 96.5 MMb/d, shedding 180,000 b/d in February.
However, production stood 1.8 MMb/d above a year earlier, as a slight decline in non-OPEC output "was more than offset by OPEC gains," the IEA said. In 2016, it estimated non-OPEC production to fall to by 750,000 b/d, or 100,000 b/d less than foreseen in February.
Sharp decelerations in demand growth - particularly in the US and China - pulled global growth down to a one-year low of 1.2 MMb/d in 4Q 2015. The agency said this was "dramatically below" the near five-year high of 2.3 MMb/d in 3Q 2015. A gain of around 1.2 MMb/d is forecast for 2016.
Still, the IEA was cautious, noting that the recent gains “should not, however, be taken as a definitive sign that the worst is necessarily over. Even so, there are signs that prices might have bottomed out.”