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Doha meeting risks to disappoint oil market

Oil&Gas Materials 12 April 2016 13:12 (UTC +04:00)
The upcoming meeting of the oil producers in Doha may disappoint the market resulting in just another statement about the readiness to cooperate.
Doha meeting risks to disappoint oil market

Baku, Azerbaijan, April 12

By Aygun Badalova - Trend:

The upcoming meeting of the oil producers in Doha may disappoint the market resulting in just another statement about the readiness to cooperate, Edward Chow, a senior fellow in the Energy and National Security Program at the Center for Strategic and International Studies (CSIS) believes.

"Frankly I expect very little from the Doha meeting, other than a nice statement pledging future cooperation," Chow told Trend via e-mail.

On April 17, major oil producers are expected to meet in Doha to discuss an agreement to freeze oil output at January 2016 levels.

Earlier Saudi Arabia stated that it will only freeze its oil output if Iran and other major producers do so. Iran in its turn said that Tehran will not join the oil output freeze plan.

None of the meeting participants have indicated any willingness to cut their production, Chow said.

He stressed that currently, global supply still exceeds global demand and this is unlikely to change before the end of 2016 or beginning of 2017.

"Holding this meeting actually risks disappointing the market if no concrete actions comes from it. It may lead to further testing of the $40 price level," Chow said.

The total world oil supply will amount to 96.44 million barrels per day in 2016 and 96.7 million barrels per day in 2017, according to the US Energy Information Administration's (EIA) forecasts.

The EIA expects the world oil demand at 94.85 million barrels per day in 2016 and 96.06 million barrels per day in 2017.

U.S. oil prices rose more than one percent Monday as a rally in wider commodities markets encouraged buying ahead of a meeting of oil producers in Doha next Sunday, aimed at freezing current output levels, CNBC reported.

Brent crude futures, meanwhile, were up 96 cents at $42.92 a barrel, having touched a session high of $43.06, the highest level since Dec. 7.

The U.S. WTI crude settled at $40.36 a barrel, up 64 cents, or 1.61 percent, after touching an intra-day high of $40.75, near a three-week high.

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