Doha’s decision to host the high-level ministerial meeting on April 17 follows ongoing discussions among Saudi Arabia, Opec president Qatar, Venezuela and Russia on proposals to freeze production.
Earlier, Qatar said around 15 members, both from the Organisation of the Petroleum Exporting Countries and non-Opec producers, accounting for about 73% of global oil output, are supporting the initiative.
With demand growth proving resilient and high-cost US producers cutting their output, oil prices may recover further and a price of $60/barrel is “probably within range” in the medium term, according to QNB.
“We expect the rebalancing to continue and forecast oil prices to recover further, averaging $41 in 2016, $51 in 2017 and $56 in 2018,” QNB said.
Faster rebalancing in the oil market is possible if a level of trust can be established between Opec and non-Opec producers in Doha, points out Samba Financial Group.
Samba still expects the market will start to “rebalance” this year as the massive cuts in oil investment over the last couple of years begin to be reflected in lower supply.
Prices may well be “volatile” as financial investors adjust positions but Samba projects Brent will average $60/b next year.
Estimates for 2015 confirmed that oil demand grew strongly at around 1.5mn bpd as lower oil prices helped stimulate demand in advanced economies, particularly the US, pushing OECD (Organisation for Economic Co-operation and Development) demand up around 0.4mn bpd.
This added to steady growth in non-OECD countries, particularly China and India.
A Reuters dispatch quoted senior Iraqi oil official Falah Alamri and said he was confident the Doha meeting would result in a deal to freeze output, which would signal that prices have bottomed out.
According to estimates from the International Energy Agency (IEA), oil markets were over-supplied by around 1.8mn barrels per day (bpd) in 2015.
In 2016, QNB expects excess supply to fall to 1.2mn bpd from 1.8mn bpd last year. Part of this contraction will be due to higher demand, which it expects to grow by 1.2mn bpd.
A statement issued by the Ministry of Energy and Industry earlier said: “It is worth noting that the Doha meeting of February 16 has changed the sentiment of the oil market and put a floor under the oil price. This has triggered a broad and intensive dialogue between all oil producers out of the conviction that current oil prices are not sustainable.
“This is evident by the unprecedented drop in investment in the oil industry, which has indeed started to impact oil production worldwide, showing a decline that seems likely to continue. This drastic reduction in investment is already taking its toll on the oil industry.”
The success of the April 17 meeting of major oil producers in Doha will be a major step forward in stabilising the global oil market, which has been challenged by declining prices since mid-2014.
Global oil market stability is essential to ensure the much-required investments in the industry and steady supplies, which are important for producers and consumers alike.