Faster rebalancing in the oil market is possible “if a level of trust can be established” between Opec and non-Opec producers at the high-level Doha meeting this month, says a new report. 
Markets have “taken heart” from continuing discussions among Saudi Arabia, Qatar, Venezuela and Russia on proposals to freeze production, according to Samba Financial Group.  
Qatar as the current president of the Organisation of the Petroleum Exporting Countries is hosting a ministerial level meeting of global oil producers in Doha on April 17. 
“While there are many reasons to be sceptical that a workable agreement can be reached (it remains contingent on other producers, notably Iran joining in), and what is proposed is merely a commitment to freeze supply rather than a cut, the fact that talks are continuing between the world’s two largest oil exporters offers a glimmer of hope that markets have gladly clung on to,” Samba said. 
Talks are set to resume in Doha this month, Samba said and noted these are likely to review compliance with the proposals to freeze output at January levels. 
“If a level of trust can be established, then the prospect of a coordinated supply response between Opec and non-Opec producers becomes less far-fetched, leading to a potentially faster rebalancing in the markets,” it said. 
According to Samba, futures prices have ticked up a bit in recent weeks, but are still below the full cycle cost curve for many, if not most, producers.
This suggests that current low prices are unsustainable, and it continues to project prices higher than the futures market. That said, the slump in prices this year, weaker global growth prospects, still high stocks, and the only slowly developing supply response, have caused it to revise down its 2016 average Brent price projection to $40 for a barrel. 
However, Samba still expects the market will start to “rebalance” this year as the massive cuts in oil investment over the last couple of years begin to be reflected in lower supply. 
Samba also continues to assume that any increase in Opec output this year will primarily be limited to Iranian gains. 
Prices may well be “volatile” as financial investors adjust positions (futures and options contracts amount to 20 times physical daily oil consumption), but Samba projects Brent will average $60 in 2017.
Estimates for 2015 confirmed that oil demand grew strongly at around 1.5mn bpd as lower oil prices helped stimulate demand in advanced economies, particularly the US, pushing OECD ( Organisation for Economic Co-operation and Development) demand up around 0.4mn bpd. 
This, Samba said, added to steady growth in non-OECD countries, particularly China and India. Chinese crude import data was strong in February but, with growth slowing, full year demand is expected to be lower. 
Meanwhile, many emerging markets are still struggling, and the gains from lower oil prices in advanced economies are expected to fade. In this context, oil demand growth is projected to slow to around 1.2mn bpd, with downside risks mainly centred on developments in China, Samba noted.