Data from the American Petroleum Institute released after the close of trading Tuesday show crude oil inventories grew by 9.9 million barrels for the week ending February 26.
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Leading U.S. shale oil producers such as Marathon Oil plan to cut output by about 10% on the year in 2016. But tide has gradually turned recently, mostly buoyed by rising expectation of a production adjustment after the Russian energy minister said a “critical mass” of oil producing countries are on board to hold productions at January levels. Some are also speculating the oil company is preparing for an “acquisition spree” after it tapped the debt market with a $12 billion deal.
Based in Houston, Halliburton provides a range of services and products to the upstream oil and natural gas industry worldwide.
As export heavyweights including Saudi Arabia and Russian Federation have moved to freeze output, the market share war that had been overheating appears to be running its course.
The renewed optimism in the market, however, is strengthening the argument that “the bottom in the crude oil market could now be in place for 2016”, said ANZ Research.
OPEC production has surged since the group in November 2014 abandoned its traditional role of cutting supply alone to prop up prices, in the hope that lower prices would curb the growth of more costly-to-develop competing supply sources.
Saudi Arabia, Russia, Qatar and Venezuela announced in February that they have agreed to freeze oil production at levels reached the previous month.
The kingdom’s oil minister Ali al-Naimi said last week a supply cut was not being considered but the production freeze was the first step to balancing the market.
But because any meeting – and it has not yet been set – would not lower output, and because crude stockpiles continue to mount in the United States and elsewhere, analysts said the new price levels remained frail.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.2 million barrels, hitting another all-time high, EIA said.
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In addition, Commerzbank analysts indicated, prices also benefited from the encouraging statements from one of the main representatives of the International Energy Agency (IEA), which said Tuesday that crude prices had bottomed and expected to rise moderately over the year. Iran, however, has been a critical holdout so far, as the country seeks to increase its production after years of worldwide sanctions.
