EnergyInsights.net 
Oil price recovery to accelerate as smaller producers slash output 27-03-2016 5:16 pm
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Smaller oil producing nations make deeper cuts to output than early forecasts suggested
 

Oil prices could rebound sooner than expected as smaller oil producing nations make deeper cuts to output than forecasts suggested.

Analysts at Bernstein claim that production from non-Opec oil producers outside the US is falling four times faster than the International Energy Agency estimated, meaning prices should recover faster than expected.

The research shows that net oil production from China, Russia, Mexico, Canada and the North Sea is declining by 220,000 barrels a day, compared to IEA forecasts of a net decline of just 50,000 barrels a day for the group.

The steeper than expected declines will help oil markets rebalance in the second half of 2016, the brokerage said.

In the relatively high-cost North Sea basin, Bernstein expects production to decline by almost 95,000 barrels a day, compared to the IEA forecast of a 50,000 barrel a day decline.

UK and Norwegian oil production showed modest growth last year despite plummeting market prices, but Bernstein said this was due to a string of start-ups financed well before the crash as well as limited maintenance outages which are “unrepeatable” this year.

“Current oil prices are below the cash break even for marginal producers and will force a faster than expected decline in production than many expect. We believe that the market has underestimated the magnitude of falling production and is thus assuming a more delayed re-balancing of the oil markets,” Bernstein said.

Oil prices have climbed over 50pc in two months to around $40 a barrel after hitting twelve year lows below $30 in January, in what many believe could spell the end of the twenty month oil price rout.

www.telegraph.co.uk/

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