Oil prices traded fell on Tuesday after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output at January levels if other big exporters joined them.
Qatari energy minister Mohammad bin Saleh al-Sada told a news conference that the step would help to stabilize the oil market, which has experienced price declines not seen since the early 2000s because of the pace at which supply has outstripped demand.
Analysts said that while the decision is a step in the right direction to bring supply and demand back into balance, global inventories remain near record levels and are likely to dampen any price rallies.
“I don’t think it will have a huge impact on supply/demand balances, simply because we were oversupplied in January anyway. We’re just even more oversupplied now,” Energy Aspects analyst Dominic Haywood.
“So in that regard it’s not huge but it’s a step in the right direction. But you’ve still got a huge amount of inventory that is going to weigh on the price for a long time and we need to clear that, because it’s going to kill any rally.”