Freezing oil output at current high levels would simply maintain the excess supply that is now in place and, as such, would not be a game-changer for the oil prices, Tom Pugh, the economist at British economic research and consulting company Capital Economics believes.
“A sustained recovery in oil prices would probably require outright cuts in global supply and increases in demand,” Pugh said in a report, obtained by Trend.
He believes that the next big move up will not take place untill next year when the market should be much closer to balance.
Capital Economics’ analysts expect oil prices (both WTI and Brent) to be at $45 per barrel in the end of this year and $60 per barrel in end-2017.
On April 17, major oil producers are expected to meet in Doha to discuss an agreement to freeze oil output at January 2016 levels.
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 world oil demand at 94.85 million barrels per day in 2016 and 96.06 million barrels per day in 2017.