Oil Prices Expected to Remain Choppy As Russia, Iran, and Libya all Indicate Rising Output

Barclays analyst Miswan Mahesh says demand for oil "isn't looking as bright as it was at the beginning of the year"

After hitting a two-month low on Wednesday, crude reversed back into positive territory with a rise of 1 percent, with nine consecutive weeks of inventory draws said to be easing concerns about the persistent market glut.

And even though demand for oil, as pointed out by Miswan Mahesh, analyst for Barclays, "isn't looking as bright as it was at the beginning of the year," the push to increase output is still the apparent trend for global producers, if the latest news from Russia, Iran, and Libya is any indication.

Alexander Novak, energy minister for Russia, said in an interview this week that there were no discussions about possible coordination with the Organization of the Petroleum Exporting Countries after failing to jointly maintain production levels earlier this year: "We can't agree on production cuts as we don't have such tools and mechanisms."

Novak said he expects domestic oil output to be as much as 544 million tonnes this year after hitting a 30-year high of 534 million tonnes in 2015, and he conceded that prices could be lower than his prediction of $40-$50 in 2016 due to the seasonal decline in demand (for the record, he also believes the global market will re-balance by mid- or end-2017 depending on what actions Saudi Arabia takes).

Meanwhile, Iran expects an 8.5 million litres per day output rise of its Isfahan Oil Refinery, according to local media, due to $2 billion in production improvements, made possible by a deal between the Islamic Republic and South Korea's Daelim Company.

Lotfali Chavoshi, managing director for Isfahan, says the four-year project will bring the 36-year-old facility back to its "glory days".

As for Libya, oil exports from its eastern terminal of Hariga have resumed following the end of a pay protest by guards.

Although other Libyan terminals remain blocked, Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets, earlier this week pointed out that if the terminals re-open, it will mean "a couple hundred thousand additional barrels on the market that would be another leg lower in terms of prices."

While most analysts say the remainder of 2016 will be choppy in terms of price swings, RBC expects the supply and demand picture to improve in the latter half of 2016, with prices in the mid-$50s by the end of the year.