IEA Revises Global Outlook, Who Will Benefit&#63;

Days after Saudi Arabia and Russia agreed to a production freeze, the International Energy Agency revised their projections for the global oil oversupply situation says Michael Berger, Associate Editor of MoneyShow.com.

Although the largest oil producing countries will meet in Doha, Qatar, this weekend to discuss the production freeze proposal, but many experts do not expect the meeting to result in the reduction of production output.

The meeting will be attended by OPEC and non-OPEC members and much of the spotlight will be on Saudi Arabia and Russia, after the two largest oil producers in the world came to an agreement earlier this week.

IEA Sees Oversupply Scenario Improving

This morning, the International Energy Agency (IEA) said they expect global oil markets to move closer to balanced during the back half of 2016 as the low price environment impacts oil production outside of OPEC.

The IEA released a report which said that they expect the global surplus to decrease to 200,000 barrels a day in the last six months of the year from 1.5 million in the first half.

The majority of this decrease will come from non-OPEC producers as the United States shale oil boom loses strength. On Wednesday, the Energy Information Administration said that domestic oil production fell below 9 million barrels a day last week for the first time in 18 months.

Russia and Saudi Arabia Reach Agreement

Oil prices climbed higher on Tuesday after Saudi Arabia and Russia agreed to freeze oil production ahead of the Doha meeting on Sunday. Oil prices, which sank to 12-year lows in January, have rallied 30% in the past two months as OPEC and Russia have worked on a plan to cut oil production.

Russia and Saudi Arabia are the world’s largest producers and exporters of oil. An agreement between the two countries is one of the key factors for the Doha meeting to succeed.

On Wednesday, Russian Energy Minister Alexander Novak confirmed his talks with Saudi Arabian Oil Minister Ali al-Naimi, but did not reveal details of the meeting. According to Novak, the deal on freezing oil output is possible without Iran’s participation.

Outlook Shift

The latest outlook represents a shift for the IEA, which as recently as February said that the global oil glut will persist into 2017 as the surplus takes even longer to clear than previously estimated.

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