OPEC Production Freeze Plan Now Off The Table

Talks of a global crude oil production freeze at last month’s oil producers’ meeting in Doha will likely not resume at OPEC’s June meeting. Two delegates now say that there are currently no freeze proposals on the table.

According to the delegates, the recent surge in oil prices has eliminated the necessity of a freeze. The delegates, who reportedly represent two nations in favor of the freeze last month, now say that fundamental improvement in the global oil market in the last month indicates that the market is on track to re-balance on its own.

The U.S. oil & gas industry has been hit particularly hard by the slump in commodity prices. The most recent bankruptcies of Midstates Petroleum and Ultra Petroleum now bring the total U.S. energy bankruptcies to 59. Ironically, the financial stress that the oil downturn has placed on U.S. producers has helped alleviate the oversupply.

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U.S. crude oil output fell for the eighth consecutive week last week to just 8.83 million barrels.

The International Energy Agency believes that the global supply/demand balance will continue to improve in the second half of 2016.

The United States Oil Fund LP (ETF) USO is now down 3.0 percent in 2016.

Disclosure: the author holds no position in the stocks mentioned.