Oil prices may have bottomed out, says IEA

The International Energy Agency (IEA) says it believes oil prices may have bottomed out, according to Reuters. The energy agency considered declining US production, accelerating production in other countries, and a less-than-dramatic Iranian return to production as factors in its comments on the state of oil prices.

The IEA expects that non-OPEC output could fall by 750,000 barrels per day (b/d) in 2016 compared to its previous estimate of 600,000 b/d. US production alone could decline by 530,000 b/d this year, it believes.

Reuters noted that oil prices fell below $30 per barrel in January, in part due to a supply glut stemming from strong US output and OPEC's decision to increase supply to protect market share against higher-cost producers. Prices recently rose to $40 per barrel after Saudi Arabia and Russia suggested they could freeze output.

In February, OPEC output decreased by 90,000 b/d, in large measure due to production outages in Nigeria, Iraq, and the United Arab Emirates. The IEA estimates that Iran’s production increased by 220,000 b/d, marking a more gradual return to anticipated production levels than previously expected.

 

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