Crude Oil Surges on Improved OPEC Outlook
Prices of Crude Oil surged on Friday, rising 2.43% in the North American trading session ensuring the commodity closes the week in the positive. The spike follows the International Energy Agency (IEA) suggesting on Friday that prices of oil may well have reached their bottom as production in the US declines as well as a fall in the other non-OPEC countries.
Another contributing factor to the positive outlook was the fact that the expected flooding of the market by Iran’s supply increase has not been overdone.
The IEA said in it’s monthly report, that after a strong 2015, the increase in global demand was slowing. The exception being India and the Middle East who showed rare signs of improvement.
The Paris-based International Energy Agency said that growth may well even slow further if the price of oil prices keeps rising.
Crude oil prices fell in January to below $30 per barrel, their lowest since 2003, primarily on a supply glut caused by reduced global demand and OPEC’s to increase supply to heighten competition for market share against higher-cost producers.
Prices have now since rebounded to around $40 a barrel following the Organization of the Petroleum Exporting Countries’ leader, Saudi Arabia, and leading non-OPEC producer Russia both saying they may halt output.
In its report, the International Energy Agency said that low oil prices were starting to have an effect upon high-cost production. It expected non-OPEC output would decline by 750,000 barrels per day in 2016, a figure higher than its previous estimate of 600,000 barrels per day. It expected production in the U.S. alone would drop by 530,000 barrels per day in 2016.
Crude Oil was trading up 2.43% at $38.76 a barrel at time of writing.
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