MOSCOW, January 16 (Sputnik) — Global oil market is showing signs of possible prices recovery as cancellation of major new extraction projects signifies future decrease in supply, suggests the Oil Market Report for January released by the International Energy Agency (IEA) on Friday.
“Today's market participants are not ruling out further declines… But the selloff is having an impact. A price recovery — barring any major disruption — may not be imminent, but signs are mounting that the tide will turn,” IEA said on its website adding that “the most tangible price effects are on the supply front.”
According to the IEA, lower oil prices do not stimulate higher demand for oil in most markets except for the United States. “The usual benefits of lower prices — increased household disposable income, reduced industry input costs — have been largely offset by weak underlying economic conditions, which have themselves been a major reason for the price drop in the first place,” IEA said.
The dramatic decrease in oil prices that went down by more than 50 percent since last June forced energy giants including Royal Dutch Shell, Premier Oil, Chevron and BP to cut expenses by putting ambitious projects on hold and cutting hundreds of jobs.
On Thursday, February futures for Brent and WTI made a brief recovery to about $50 dollars a barrel amid the revised OPEC demand forecast published earlier in the day but soon went back to around $48 a barrel. As of 17:58 GMT Friday, March futures for Brent crude oil traded for $49.51 a barrel and February futures for WTI stood at $47.83.