For last week, EIA reported a surprising excess inventory compared with expectation. Oil price plunged in a few minutes and strongly rebounded later. The promising output cut during the meeting between oil exporters is leading the market to heavily believe that oil price will go back to the last year’s level. Even though currently the oversupply still constantly exist and Iran who just join the business after sanction declared it won’t cut output until the production level goes back to the level before sanction. Oil companies are storing everywhere which made the inventory level historically high. But all the larger companies in US are working together to freeze the production and slow down of new rigs both illustrate the potential upside of oil price. Meanwhile, China is doing the policies and plans to active its economy from which the oil demand will benefit. All the good and bad things combined together contributed to a volatile oil market. Tomorrow EIA will release its weekly report which is an important indicator that determine the meeting’s topics.
Crude oil fell from the highest level in two months on expectations that reports will show U.S. inventories rose last week to an eight-decade high
U.S. stockpiles probably increased for a fourth time in the week ended March 4, according to a Bloomberg News survey before government data Wednesday. Ecuador’s foreign ministry said Latin American producers will meet on March 11 to discuss oil prices, while Russia said major suppliers may meet within weeks. China’s crude imports rose to a record in February, while product exports fell to the lowest in nine months.
U.S. benchmark oil has rallied more than 40 percent since reaching a 12-year low on Feb. 11 amid speculation a proposal to freeze production will trim a global glut. A meeting among major producers to discuss capping output may be held in Russia, Doha or Vienna sometime between March 20 and April 1, Russian Energy Minister Alexander Novak said on state television last week.
"The rally lacks some substance," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "The fundamentals just haven’t changed much. There is still no conclusive production freeze deal."