Will the oil price ever recover to $100_

It’s an uncomfortable reality for the cartel: the pursuit of a freeze deal offers minimal benefit, but still poses the threat of a failure which could cause prices to crash and delay the recovery of the market. Grade 6 electricity unit test Opec might not win, but it could certainly still lose.

“Opec has had two major failures; in the December meeting last year and the November meeting the year before when we saw a major shift in their policy,” says Saxo Bank’s respected oil analyst Ole Hansen. Kd 7 electricity socks The group’s decision in 2014 to maintain production, even as the market began to buckle under the weight of growing US shale supplies, may have been grounded in economic reason but it highlighted the cartel’s impotence in the face of a American shale revolution.

“In the past if you had a big oil price spike Opec would be the provider of the extra barrels to stabilise the market and reduce the price. Electricity freedom system These days those extra barrels are most likely going to come from American producers because they find it so much quicker to increase production if the price is right,” Hansen explains.

The biggest hurdle to reaching any meaningful agreement will be the conflicting Saudi and Iranian stances. Gas unlimited houston texas The Saudis are already pumping crude at record levels. K gas constant But Iran, newly freed from sanctions in January, has repeatedly said that it will continue to grow its production in a bid to regain market share.

But even putting aside the difficulties of striking a deal, the plans have faced a blunt backlash in the week running up to the meeting. Gas monkey live Those sceptical of its usefulness say that a production freeze would offer only a minimal boost to the current price or help the market to rebalance on a fundamental level.

UBS oil analyst Jon Rigby says that any agreement to freeze output which excludes Iran would simply be an acknowledgement of the market’s status quo.

“Current spare capacity is confined mainly to Saudi Arabia and we believe that the prospects for capacity growth elsewhere within Opec are limited – indeed some of the more peripheral producers [including Venezuela, Algeria and Ecuador] are likely to see output decline this year.

“Outside Opec, Russia is already producing at a post-Soviet high of 10.91m barrels a day and in line with our forecasts,” he says, meaning a freeze at this level would offer little relief.

A freeze might be helpful for sentiment and in preventing a further flood of production out of the Saudis’ spare capacity, but the benefits would be superficial in terms of rebalancing the market.

Goldman Sachs believes talks are unlikely to offer a “bullish surprise” for the embattled oil market, but may cause prices to reverse from recent gains even if the world’s major oil producing nations do manage to thrash out a deal.

The bank warns that even if a deal is reached it would not rebalance the market, and oil supplies may continue to swell as transient outages early this year give way to rising output.

“The market has taken comfort in the production freeze discussion and the declining US rig count, [but] we continue to believe that the balancing of the oil market is still far from secured.”

“The price has been racing ahead of fundamentals. 93 gas near me We had a major change in sentiment last week when the weekly inventory report for the US showed that inventories dropped, production dropped, refinery demand increased and imports fell.

“These four indicators all point towards improving conditions and now we need to see whether that was a fluke, or whether we’ll have another supportive inventory report. Electricity vs gasoline That really kicked off the move last week.”

The danger for Opec is that a price recovery comes too soon relative to a genuine market rebalance. 3 main gas laws Analysts warn that allowing prices to recover too quickly could undermine the rebalancing of the market by spurring a revival in US shale production as rising prices make marginal rigs economic once again.

Both UBS and Goldman Sachs agree that there is little room for further price gains after a 40pc rally from January’s record lows – but there is plenty of scope for losses.

UBS says the market has already baked in hope of a deal between the major oil producing nations meaning that success could result in only a modest move higher, while any degree of failure could result in a relapse.

“The one thing the market won’t be able to tolerate after a freeze deal is any signs of increased production – and that’s something we might see in the months moving into the summer as data becomes available,” Hansen warns. Electricity how it works Goldman adds that even if a tenuous freeze agreement is reached, oil supplies may continue to swell as temporary outages in Nigeria and Iran earlier this year give way to rising output.

Ultimately it would be up to Opec to police the agreement against the strong probability of cheated quotas which could disrupt the fragile price recovery.

The International Energy Agency said on Thursday the rebalancing of supply and demand fundamentals within the global oil market “is now taking shape”, largely due to non-Opec supply cuts. K electric company The agency’s key monthly report showed supplies fell by 300,000 barrels a day to 96.1m barrels a day, with non-Opec countries responsible for two-thirds of the decrease.

Within the cartel, output increased from Iran but was more than offset by production outages in Nigeria, the UAE and Iraq. Bad gas 6 weeks pregnant On the demand-side strong gains from India are helping to mitigate the effects of a shaky global economic picture.