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April 13, 2016

Oil prices drop ahead of Doha meeting

Oil prices have dropped after the International Energy Agency cut its forecast for 2016 global demand growth, as well as due to concerns that meeting of oil producers in Doha may not lead to a solid plan to tackle excess supply.

Oil prices have dropped after the International Energy Agency cut its forecast for 2016 global demand growth, as well as due to concerns that meeting of oil producers in Doha may not lead to a solid plan to tackle excess supply.

The IEA trimmed its forecast slightly from last month to 1.16 million barrels each day.

It also stated that an agreement by producers to freeze production will have restricted impact on curbing supply.

"It’s not going to be an agreement, but a declaration of intent to say that if everything goes well we’ll keep production at January levels."

Brent crude futures LCOc1 fell 54 cents to reach $43.64 a barrel, while US crude CLc1 dipped 47 cents to touch $41.29 a barrel.

Major oil producers including Saudi Arabia and Russia will meet in Doha, Qatar, this Sunday to finalise a plan agreed upon in February to put a freeze on oil production at January levels, with an aim to improve prices.

It is also likely that producers may not officially agree cut production.

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Currently, per day oil production is around two million barrels in excess of demand.

ABN Amro senior energy economist in Amsterdam Hans van Cleef told Reuters: "It’s not going to be an agreement, but a declaration of intent to say that if everything goes well we’ll keep production at January levels."

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