Will Production Freeze Work?

Although Saudi Arabia and Russia and some OPEC countries agreed to hold production at January levels on Feb 16th, the chance of this having a positive global effect may be minimal. January levels were at near record highs, and many OPEC and non-OPEC countries will continue to increase production. OPEC counties, Venezuela, Nigeria and Angola, are in such dire economic situations that they will maintain output to keep up cash flow. Iran’s output is ramping up steadily and is expected to reach 3.9 mbbl//d in 2016. Global demand is expected to increase only1.2 mmbbl/d in 2016 leaving a continued oversupply. U. S. shale producers are not cutting back production as OPEC anticipated. Investors believe “any potential oil price recovery in late 2016 continues to rest on the U.S.’s shoulders.”