Crude ticks up, amid sharply lower build in U.S. weekly inventories

“Some of our neighbours have increased their production to 10 million barrels a day in recent years and export this amount, and now they have the nerve to say we should all freeze our production together”, Bijan Zanganeh was quoted as saying by the Iranian news agency ISNA. “Last year, global oil demand grew by twice its 10-year average”, he said.

Crude oil prices tumbled for a second session Wednesday, after Saudi Arabia’s oil minister Ali al-Naimi downplayed chances for a deal to curb oil production.

Last week, Saudi Arabia, Qatar, and Venezuela – all members of the 13-member OPEC oil cartel – along with Russian Federation announced a coordinated oil-production freeze in an effort to bring some balance to the oil market.

April West Texas Intermediate crude fell $1.52 to settle at $31.87 a barrel on the New York Mercantile Exchange.

“Without a material reduction in supply, we’re still looking at an ongoing supply and demand surplus, with higher inventory levels and possibly lower oil prices still on the way”, said Tim Evans, a Citi Futures analyst.

April Brent crude oil futures on London’s ICE Futures exchange dropped by US$1.42, or 4.1%, to settle at US$33.27 a barrel.

The U.S. Energy Information Administration will report official inventory data later on Wednesday.

All of this is bad news for the stock market, which is obsessed with the downsides of cheap oil.

On Wednesday, prices picked up in late trading following the release of strong gasoline demand data. “However, the signing does not mean absorption since it will take some time for the resources to be absorbed”, he said.

Oil has slid from more than $100 a barrel since mid-2014, pressured by excess supply and a decision by the Organization of the Petroleum Exporting Countries to abandon its traditional role of cutting production to boost prices.

Between 1 million and 2 million barrels of crude are now produced every day in excess of demand, leaving storage facilities around the world brimming with unwanted supplies. The deal, though, is contingent on receiving cooperation from Iran, which has been resistant to cap output as it returns to global energy markets for the first time in nine years.