Oil prices have exceeded $40 per barrel, on the back of rising expectations that major crude exporters will reach an accord and freeze the crude output at January levels. Climbing oil prices became the reason for another OPEC meeting where a new price target of $50 per barrel would be the main topic for discussion.
Gary Ross, the founder of PIRA consultancy, said that oil at this cost per barrel is going to become the new anchor for global crude prices. The global oil prices indeed received a substantial boost in the past two weeks. First of all, the prices were backed by decreasing rig count in the United States. Secondly, they extended gains amid speculations over the deal to freeze oil production at January levels. Major producers believe the agreement will help tackle the global oil supply glut. As a result, Brent crude futures edged up by 73 cents to trade around $40.30 per barrel. Previously, Brent crude hit a three-month high at $41 per barrel. Meanwhile, WTI futures rose by 56 cents to $37.06 per barrel. Some analysts expect the global oil market to rebalance as early as in the second half of 2016.
Crude oil prices surged by near 25% after Saudi Arabia, Qatar, Venezuela, and non-OPEC Russia announced their plan to freeze output at January levels if other producers agree to join the deal. The average annual oil price in 2016 is expected to be lower than that in 2015 followed by a recovery in 2017. The forecast reflects the persistent oversupply and large crude oil inventories as of the first half of 2016.
