Oil prices rose above $40 a barrel, driven by anticipation that the world’s largest exporters could agree this month to freeze production and help erode the largest global build in unwanted crude in years.
Producers in and outside the Organization of the Petroleum Exporting Countries (OPEC) plan to meet in Moscow on March 20 to discuss an output freeze. Brent crude futures rose 62 cents to $40.27 a barrel, having touched three-month highs on Tuesday above $41, while US crude futures were up 49 cents at $36.99.
Oil prices have risen by around 25 percent since Saudi Arabia, Qatar, Venezuela and non-OPEC exporter Russia said in mid-February they would leave supply at January’s levels if there was enough support from other producers.
Analysts at Bernstein said poor economics could lead to more oilfield closures. Only two months into 2016 we find cumulative shut-in production has already reached 60,000 bpd (barrels per day) and up to 260 million barrels of reserves, adding these fields were in Norway, Colombia, Brazil, China and East Timor.
Energy consultancy Wood Mackenzie said it expected “the annual average price for 2016 to be lower than 2015 and then recover in 2017, reflecting large oversupply and high stock levels during the first half of 2016.”