Crude oil rebounded slightly today from the previous day’s sharp selloff, but gains were capped by a gloomy market assessment from the IEA energy watchdog.
In midday deals in London, Brent North Sea crude for delivery in April was up 11 cents at $32.99 a barrel.
US benchmark West Texas Intermediate for March delivery added 46 cents to $30.15 a barrel compared with yesterday’s close.
“Oil prices are recovering slightly from the heavy losses they suffered” yesterday, said Commerzbank analyst Carsten Fritsch.
Prices had fallen sharply yesterday after weekend talks between OPEC kingpin Saudi Arabia and fellow cartel member Venezuela dashed hopes for a reduction in world production.
“Hopes of coordinated production cuts appear to be dwindling after Sunday’s meeting between the oil ministers of Saudi Arabia and Venezuela failed to yield any concrete results,” added Fritsch.
The International Energy Agency (IEA) also played down talk of a global output cut, warning today that the supply glut would prevent any short—term price rebound, and also shaved its 2016 demand forecast.
“With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” the Paris—based IEA said in its monthly market report.
“In these conditions the short term risk to the downside (for prices) has increased,” added the watchdog that advises countries on energy policy.
Late last month, prices had rallied on speculation that Russia — the largest global oil producer — and the 12-nation OPEC cartel could discuss coordinated output cuts.
However today, the IEA poured more cold water on the prospect of a potential agreement.
“Persistent speculation about a deal between OPEC and leading non—OPEC producers to cut output appears to be just that: speculation,” the IEA said.
“It is OPEC’s business whether or not it makes output cuts either alone or in concert with other producers but the likelihood of coordinated cuts is very low.”
And it noted that OPEC was responsible for the supply glut hitting the market, adding that sanctions—free Iran, Saudi Arabia and Iraq had “all turned up the taps” in January.
The watchdog also lowered its 2016 world oil demand forecast by 0.1 million barrels per day to 95.6 mbd.
Oil had crashed in January, with New York crude ducking below USD 28 for the first time since September 2003 on abundant crude supplies and global economic gloom centred on China’s slowdown