UAE oil minister expects market supply to ‘stabilise’

Globally $400bn of spending on new oil and gas projects has been shelved since the price of crude oil collapsed.

The rally began late Thursday after The Wall Street Journal posted translated comments from the United Arab Emirates’ energy minister about whether members of the Organization of the Petroleum Exporting Countries are more open to cutting output. Last month, Russia’s energy minister said the nation would be willing to discuss a 5% cut during talks with OPEC in February, but OPEC hasn’t announced if it plans to meet with Russian officials. Still, “the market is increasingly anxious about the outlook for demand and in particular demand on the us market”.

But after a seventy five % worth droop since mid-2014 that has taken crude costs to greater than 12-year lows, many have been inclined to consider that a rebound was due ultimately if manufacturing tightens or demand picks up.

“Until you get Russian Federation and Saudi Arabia agreeing to reduce output, I don’t think there is going to be any coordinated supply cuts between OPEC and non-OPEC members”, said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd in Sydney. The contract pared weekly losses to 2 per cent.

April Brent crude on London’s ICE Futures exchange lost 78 cents, or 2.5%, to $30.06 a barrel. Just on Thursday, it hit a 12-year low of $26.05.

The OPEC has refused to cut output as it looks to maintain market share in the face of competition from U.S. shale leading to a supply glut, which is keeping prices at multi-year lows.

Oil prices had already been higher but pushed to larger gains after the Baker Hughes weekly survey showed that USA weekly oil rigs had declined by 28 rigs to 439. Prices are down about 10 percent this week. “WTI is suffering from record-high stocks at Cushing”.

The proposal of a production “freeze” at current levels was floated by Venezuelan Oil Minister Eulogio Del Pino during his tour of producing countries this month which included Russia, Iran, Qatar and Saudi Arabia.

“This is really a classic price action where you make a new low and then rebound strongly”, said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston.

“We expect recent crude volatility to persist”, investment bank Jefferies said, adding that it expected oil markets to start rebalancing in the second half of the year.