Oshiro Associates - Oil Prices Hit 2016 High

Tokyo, Japan, March 22, 2016 (Newswire.com) - ​Oshiro Associates: Oil prices have risen to their highest levels of 2016 on the strength of hopes for a freeze in production at January levels and an apparently more dovish tone on rate hike expectations from the US Federal Reserve.

Both benchmarks – Brent Crude and West Texas Intermediate (WTI) – are trading above $40 a barrel as investors become less concerned about the continuing supply glut that has sent prices tumbling from over $100 a barrel in June 2014 to below $30 in January 2016.

The meeting will aim to build on an accord struck between Russia, Saudi Arabia, Qatar and Venezuela last month in which the four countries tabled the possibility of a freeze on production at January 2016 levels, a proposal they hope will draw a line under price falls.

Oshiro Associates, Commodities Researcher

Bulls have taken heart from the decline in the number of US oil drilling rigs in operation and hopes for a positive outcome of a forthcoming meeting between OPEC and non-OPEC producers set for April in Doha, Qatar.

“The meeting will aim to build on an accord struck between Russia, Saudi Arabia, Qatar and Venezuela last month in which the four countries tabled the possibility of a freeze on production at January 2016 levels, a proposal they hope will draw a line under price falls,” noted an Oshiro Associates commodities researcher. “It seems to have achieved its objective but the forthcoming meeting will need to deliver on its rhetoric.”

Prices have been helped in recent days by a notably more dovish Federal Reserve. The central bank has scaled down its expectations for interest rate hikes this year from 4 to just 2. The announcement, made last week Thursday, weakened the US dollar, the currency in which most commodities, including crude oil, are priced.

“While we don’t expect oil prices to rush back up to $100 a barrel any time soon, I think we’ve seen the bottom in the current cycle” said the Oshiro Associates researcher.