Energy experts say an oil production freeze proposal by Saudi Arabia and Russia will not affect an already rebounding oil market.
Russia and Saudi Arabia, as well as various Organization of the Petroleum Exporting Countries (OPEC), are meeting Sunday in Qatar to iron out an agreement on how best to necessitate historically low oil prices.
Analysts are now saying the maneuvers may be all for naught, as energy markets are clearly on the rebound.
The International Energy Agency (IEA), in a Thursday oil market report, noted, “any deal struck will not materially impact the global supply-demand balance,” mostly because “Saudi Arabia and Russia are already producing at or near record rates.”
Riyadh’s oil production dipped 30,000 barrels to 10.91 million barrels a day in March, yet it still pumped at peak levels. Russia, for its part, pumped out a record 10.91 million barrels a day during the same month, according to official statistics.
The IEA report expects non-OPEC oil production to plummet, dropping about 710,000 barrels a day to less than 60 million barrels a day.
IEA says that weak production within OPEC nations will result in low outputs of 96.1 million barrels a day for March.
The low oil prices are due in part to a massive increase in natural gas production in the U.S.
Nevertheless, low oil production and high demand, the glutted oil reserves will likely fall with annual gains shrinking to 0.2 million barrels a day as 2016 rolls on. The drop down will likely lead to an increase in oil prices without maneuvering.
The Energy Information Administration (EIA) stated on March 31 that oil production is getting cheaper and cheaper thanks to hydraulic fracturing, or fracking.
“Costs per well generally increased from 2006 to 2012, demonstrating the effect of rapid growth in drilling activity,” the EIA report stated. “Since 2012, costs per well have decreased because of reduced overall drilling activity and improved drilling efficiency and tools.”
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