(MENAFN- ProactiveInvestors)An oil price of around US$30 a barrel is crippling the market as this unwelcomed period of sustained stagnation persists. Equity markets as well as commodity markets may have got a boost at the end of the week but the vicious volatility seen in recent months continues to dampen optimism. WTI hit below US$27 a barrel mid-week but rebounded slightly on Friday. OPEC released its monthly oil market report this week saying that 'any better-than-expected performance of global economic growth improvement in industrial activities and a return to normal weather patterns could further support higher oil demand growth in the current year.' After an 'exceptional' year in 2015 the market can certainly be happy with demand but over supply will keep prices low and challenge the industry for the rest of the year. The report also made it clear that demand in 2016 'though robust' will not be as encouraging as during 2015 when oil consumption according to OPEC was above 1.5 million barrels a day. The International Energy Agency says it was 1.6 million barrels. The lower oil price has certainly encouraged demand growth in transportation fuel and the OPEC monthly report says the world has also seen 'solid gains in the petrochemical sector in China US and Asia-Pacific.' The Venezuelan oil minister Eulogio Del Pino locally known as the 'People's Minister of Petroleum and Mining' concluded his oil producing countries lobbying tour in Saudi Arabia this week. He's previously been to Russia Iran and Qatar and despite various news headlines there's no sign of an agreement and little support for an early OPEC meeting. The latest proposal is reported as being a 'production freeze' at current levels by OPEC and non-OPEC players. Saudi Arabia has always said it was willing to talk but 'sources' say there'll be no action unless Iran agrees to a production freeze. While Iran is desperately trying to rebuild its energy infrastructure and claim back its rightful oil production level there's a feeling this will not be an attractive option; and so the vicious cycle of stalemate continues. Market sentiment got another boost at the end of the week with reports that the UAE energy minister Suhail Al- Mazrouei is talking about more talks and possible co-operation for a production cut with non-OPEC players. Minister Al-Mazrouei has always welcomed and encouraged stronger co-operation so the reaction appears to be a bit exaggerated by industry players reading too much between the lines. This week's report from the International Energy Agency cites an increase in OPEC production to 32.6 million barrels in January. The report says it cannot see much of an improvement in the oil price in the year ahead as OPEC members continue to produce at their current rate. 'Saudi Arabia Iraq and a sanctions-free Iran all turned up the taps' with supply in January standing nearly 1.7 million barrels a day higher year-on-year. Key players from the IEA and OPEC will meet in Saudi Arabia next week for the International Energy Forum's Sixth Symposium on Energy Outlooks. Hope and sentiment alone cannot drive this market to a higher place. The fundamentals continue to be overweighed on the supply side and the projected increase in demand will not be sufficient to correct this imbalance. American oil production has fallen in recent months and billions of dollars of investment has been taken off the market. A report from Capital Economics expects 'the prices of most commodities to recover partly as a consequence of better news from China.' Wherever the good news comes from lower oil prices should help increase demand and ultimately boost spending and consumer demand and thereby drive the global economy and hopefully reduce the current oil supply glut. That might be ideal thinking but the fear factor seems to be keeping everyone on hold. Brave leadership will be required to shift this market but for now no-one wants to make the first move.
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