At the close of trading on Friday, oil prices rose 4 percent following comments by the Saudi oil minister about the possibility of intervening to stabilize prices.
Oil Rises To $43.49 a Barrel, Up 4.27 Percent
At the same time, the International Energy Agency ( IEA) predicted that crude oil markets would become even tighter in the second half of 2016.
Khalid al-Falih, the Saudi Energy Minister said OPEC members and non-members were keen on discussing ways to stabilize the market. He added that this would include taking action that would mitigate the plummeting oil prices.
The comments by Mr. Khalid seem to have triggered a boost in oil prices as traders engaged in fund buying.
Even then, majority of traders are skeptical of this rise in oil prices and of the promise made by the minister. Indeed, it is widely expected that a repeat of the April meeting in Doha will occur when talks collapsed due to a lack of cooperation among members.
The IEA is however positive that global oil stocks will attract favorable prices in the next few months helping to ease the persistent oil glut that has been in existence since 2014.
In its monthly report, the Paris-based IEA said, “A drop in oil prices has brought further attention to the glut. Even then, our forecasts indicate no oversupply in the second half of the year.”
In the U.S., light crude rose 4.7 percent while the North Sea Brent crude rose $4.29 to settle at $43.49 and $45.92 respectively.
It is expected that global demand will fall from 1.4 million barrels a day in 2016 down to 1.2 million barrels per day in 2017, according to IEA reports
According to OPEC forecasts, demand for its crude in 2017 will stand at 33.01 million barrels per day, an indication that the oil producing region could face a surplus of $100,000 barrels a day if output is kept steady.