Crude prices steadied on Thursday, as the International Energy Agency (IEA) said 2016 would see the biggest fall in non-OPEC production in a generation, helping to rebalance a market dogged by oversupply.
IEA chief Fatih Birol said low oil prices had cut investment by about 40 percent in the past two years, with sharp falls in the United States, Canada, Latin America and Russia.
Benchmark Brent crude futures eased 7 cents to $45.73 a barrel by 0852 GMT.
U.S. crude futures were 4 cents lower at $44.14.
Both crudes have gained around 70 percent in value from their lows reached between January and February.
The drop in supply from some producers could be offset by increased production in countries including Russia and Iran, however.
Russia’s energy minister said the country might push oil production to historic highs. Iran has reiterated its intention to reach output of 4 million barrels per day, after a global deal to freeze output collapsed and Saudi Arabia threatened to flood markets with more crude.
Nigeria will hold talks with Saudi Arabia, Iran and other producers by May, hoping to reach a deal on an output freeze at the next OPEC meeting in June, the West African country’s oil minister told Reuters.
“The focus of the market is primarily on price-supportive news and that’s just an indication of how sentiment is,” Saxo Bank senior manager Ole Hansen said.
Hansen said fund flows into commodities had been strong this week, driven by a weaker dollar.
Earlier this week, the dollar hit 10-month lows against some commodity-related currencies. The Thomson Reuters Core Commodity Index rose to its highest since early December. [MKTS/GLOB]
“This whole recovery has been driven by supply being capped and supply is price-sensitive and again we’re back to levels where we could see some of these producers breathe again,” Hansen said.
French bank BNP Paribas said any hope of market rebalancing from the current surplus relied on a predicted decline in U.S. oil production.
“The U.S. accounts for the bulk of non-OPEC’s 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the U.S. oil supply proves insufficient to tighten balances, then … the oil price will remain low,” it said.
In refined products, China saw exports of diesel and gasoline soar, spilling surplus fuel into a market that is already well supplied, and threatening to further cut Asian benchmark refining margins.