“We now really see Iranian crude starting to move, and that should alert the Saudis”, said one trader with a North Asian refiner, suggesting the kingdom may have to offer Asian refiners even more attractive prices to keep market share.
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Production hit another post-Soviet high last month of 10.88 million barrels per day (bpd), up from 10.80 million bpd in December, the data showed.
Crude also gained as Venezuela’s oil minister, on a tour to lobby for steps to boost prices, appeared to be gaining support from more members of the Organization of the Petroleum Exporting Countries (OPEC) and outside producers for a meeting. The frantic round of oil diplomacy has other players too: Russian Foreign Minister Sergei Lavrov talked oil with Abu Dhabi’s crown prince earlier this week.
The company kept pricing for Light and Heavy crude to the USA unchanged for March, and raised Arab Medium by 10 cents a barrel to $1.25 a barrel less than the benchmark.
“Chances of a coordinated production cut are extremely low and this is nothing new”, Michael Wittner, oil analyst at Société Générale, said in a report.
“(Oil-producing) countries are at the brink of default … so the situation is dire”.
The OPEC’s monthly report said that the downward revision in world’s non-OPEC oil supply has been due to stronger declines expected in the United States and Canada, caused by the lower price environment. OPEC’s output, meanwhile, has remained stable last month, at 32.4 million barrels a day, according to analysts at JBC Energy. Brent for April delivery was down $1,32 at $32,92 a barrel by 1315 GMT a fall, after settling down $1,75, or 4,9 percent, in the previous session. (Low oil prices are what’s responsible for low consumer gas prices.) Other markets, such as Nigeria, Suriname and Azerbaijan, have a high risk of default.
Adding to the buying is renewed hope that Russian and OPEC officials will meet to discuss cutting production to address a glut that has driven prices to around 12-year lows. In a recent research note, Goldman Sachs predicted “the path to a rebalanced market will be protracted and arduous”.
So far, none of Opec’s Gulf members, including top exporter Saudi Arabia, has publicly backed a meeting. Moreover, gasoline stocks were also up, rising by 5.9 million barrels, while distillates fell by 777,000 barrels. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.6% at $30.35 a barrel.
The weekly increase lifted total American crude supplies to 502.7 million barrels – the highest weekly level on record.
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The talk of cooperation has not bolstered oil prices or global stocks this week like it did last week, however.
