Doha Deal: Brent near 2016 high as output freeze until October on cards

Brent oil remains above $43 a barrel, near the 2016 high of $43.90 a barrel reached days ago on hopes of a production deal being agreed upon between Opec and key non-Opec oil producers.

Several major oil producers are meeting in Doha, Qatar, today to hammer out a strategy to arrest the decline in global oil prices.

Brent oil is trading at $43.10 a barrel while West Texas Intermediate (WTI) is at $40.36 a barrel. The Opec daily basket price stood at $38.58 a barrel on Thursday, April 15, 2016.

An oversupplied market saw oil prices plunge over the past year. Booming US supplies and Opec’s decision, led by the group’s biggest producer Saudi Arabia, have kept the tap open to ramp up exports in a bid to drive higher-cost producers out of the market.

That strategy seems to be working, with US and Canadian offshore shale rig count declining by more than 50 per cent in the past 12 months.

According to Baker Hughes, US rig count is now down to 440, down 54 per cent from a year ago when there were 954 rigs in the country. In Canada too, the rig count is now down to 40, down 50 per cent from 80 a year ago.

Reuters reported this morning that a draft agreement among oil producers meeting in Doha restricts production at January 2016 levels, until October 1, 2016, when producers will meet again in Russia.

A final agreement has not been reached on the draft yet.

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