The oil markets are giving up the gains they posted over the last 24 hours.
Crude oil and Brent oil prices jumped by a huge 7% on Monday because analysts thought the US would post a drop in production and alleviate some of the oversupply in the market.
The agreement between Saudi Arabia, Russia, Qatar, and Venezuela to freeze oil production at January levels is going to have little effect on the market because it is just confirmation that the oil rich countries aren’t going to turn the taps off.
The markets would be happier if Saudi Arabia promised to cut — not freeze — production, and if Iran and Iraq joined the countries in pledging to put their output levels on ice. But Iran stated that it will not after years of sanctions wrecking its economy.
Prices tumbled again once investors started to worry that any cuts to US production may be counteracted by rising output from Iran.
However, now crude oil prices are starting to slide again, by over 1.6% to $32.84 per barrel.
Brent oil is also showing a similar slide in prices:
The International Energy Agency (IEA) said in a report last night that it expects oil prices will start to recover in 2017:
“Only in 2017 will we finally see oil supply and demand aligned but the enormous stocks being accumulated will act as a dampener on the pace of recovery in oil prices when the market, having balanced, then starts to draw down those stocks.”
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