By Henning Gloystein
SINGAPORE, April 12 (Reuters) - Oil prices dipped in early
Asian trade on Tuesday, but both U.S. and international crude
futures held above $40 per barrel ahead of a meeting of major
producers to discuss freezing output levels to rein in
ballooning oversupply.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were
trading at $40.27 per barrel at 0059 GMT, down 9 cents from
their last settlement.
International Brent crude futures LCOc1 were at $42.70 a
barrel, 13 cents below their last close but only 36 cents off
their 2016-high reached the previous day.
Major oil producers from the Middle East and Russia, but
excluding the United States, plan to meet in Qatar's capital
Doha next Sunday. They will discuss measures to rein in
ballooning oversupply which sees as many as 2 million barrels of
crude produced every day in excess of demand, leaving storage
tanks around the world filled to the rims with unsold and
unwanted fuel.
Most analysts expect producers to freeze output around
current output levels, which being beyond consumption and close
to record levels would do little to address the glut.
"The potential risk for prices is for the downside as
freezing output at current levels would be more of a symbolic
act rather than a real market intervention. But you need to be
open to surprises in this market," said Ric Spooner, chief
market analyst at CMC Markets in Sydney.
While Spooner said that a production freeze would do little
to address the immediate glut, he added that keeping key Middle
East and Russian output around current levels might in the
longer term lead to a more balanced market.
"There is demand growth, and production in the U.S. is
falling, so if against that background there was a freeze,
markets could get tighter at some stage," he said.
Analysts at Bernstein said that they expected global oil
demand to grow at a mean annual rate of 1.4 percent between 2016
and 2020, versus annual growth of 1.1 percent over the past
decade, adding that global demand would reach 101.1 million
barrels per day (bpd) by 2020 from 94.6 million bpd now.
Looking further into the future, Bernstein said that world
oil demand would likely peak in the 2030s.
"The world will reach 'peak demand' before 'peak supply'.
Global oil demand is likely to peak around 2030-35 at 108
million bpd."
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GRAPHIC on U.S. rig counts http://graphics.thomsonreuters.com/15/rigcount/index.html
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