Freeze agreement falls apart without Iran
Discussion between key OPEC and non-OPEC producers about freezing production at January levels has pushed oil prices up from below $30 per barrel to more than $40 ahead of yesterday’s fruitless meeting in Doha, Qatar.

Back in January, U.S. crude oil benchmark WTI fell to a 2016 low of $26.55 per barrel while international crude benchmark Brent reached $27.88, both on January 20, as supply continued to outpace demand. Last week, news of a production freeze brought prices back up to $42.17 and $44.69 ...

Analyst Commentary

Stiefel 04.17.2016
A 2/16/16 agreement between Saudi Arabia, Russia, Qatar, and Venezuela to freeze production at January levels reversed an oil price slide and triggered a massive short covering rally. Spot Brent and WTI prices are up 43% and 54% from their mid-February lows (Figure 1) as non-commercial oil traders flipped their positions from net short to net long (Figure 2). We have contended, however, that Saudi Arabia was never committed to limiting its production as long as Iran attempted to restore volumes to pre-sanction levels. Iran refused to send a representative to the today’s meeting in Doha, Qatar while Saudi Arabia insisted that any production freeze include Iran’s participation. As such, we anticipate oil prices will retrace much of their recent ascent.

Wunderlich 04.18.2016
There was hope that coming out of Sunday's meetings there would be a production ceiling put
in place to help create a floor for oil prices, but this did not come to fruition. Much of oil's move higher of late has
been predicated on the expectation of a production ceiling, so the bad news from the meetings over the weekend
likely will send oil significantly lower, not only today but possibly for some time.

Wells Fargo 04.18.2016
. We would not be surprised to see oil prices (and energy equities) under pressure on Monday following the inability of major OPEC and non-OPEC producers to agree to a production freeze to January 2016 levels. Importantly, we believe the fundamentals support higher prices as 2016 unfolds and that any retreat is likely to be temporary and shallow. With the oversupply declining every month as non-OPEC production falls, led by declines in the U.S., planned and unplanned production outages now have the potential to have an immediate effect on sentiment and prices. Amid a shaky economic outlook, global demand growth concerns clearly remain a headwind for a sustained oil price recovery. In our view as supply/demand balance returns, geopolitical threats to supply will need to be accounted for as well.

UBS 04.18.2016
Brent and WTI are off 4% in early trading reflecting the breakdown of talks in Doha on Sunday to engineer a production 'freeze'. The primary stumbling block (as reported by the FT, Bloomberg and other newswires) appeared to be an insistence by Saudi that Iran had to participate – however we note Iran's stated ambition to restore production to pre-sanctions levels (Iranian output is currently ~3.3Mb/d vs the pre-sanctions level of 3.6Mb/d). Saudi's actions could be driven by market fundamentals: the correction is now underway in a fashion that Saudi hoped to engineer in November 2014 when it decided not to back an OPEC production cut proposal.  

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