Week of February 29, 2016
- Oil rallied last week on reports of another meeting in March among Russia, Saudi Arabia and others to discuss freezing output at January’s levels.
- Optimism seems unwarranted because Iran will not attend and freezing output at January’s high levels won’t reduce the current supply overhang.
- The Saudi oil minister also said at an IHS conference in Houston last Tuesday that a cut in supplies “is not going to happen” due to a lack of trust between producing nations, adding that Saudi Arabia can live with oil as low as $20/bbl, even though it doesn’t want to.
- The Wall Street Journal reported that empty tank cars are now being used to store surplus oil as tank farms inch closer to capacity.