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By Michael Poulson, A/S Global Risk Management

Saudi Arabia's energy minister yesterday stated that in his opinion "the fundamentals have significantly improved over the past few months", and that "we are on the right track". Focus remains on the continued high global inventories which according to OPEC's latest report remain 278 mio. barrels above the 5-year average in January. According to the minister, OPEC may be ready to extend the oil production cut agreement; they will discuss the matter in May when the organisation meets in Vienna.

OPEC member Iraq has decreased oil exports slightly over the past two weeks. February oil production was 4.57 mio. bpd and, according to the oil minister, the country plans to increase output to 5.0 mio. bpd by the end of this year. Iraq has agreed to cut 210,000 bpd in the first half of 2017, according to the OPEC production cut agreement, and baseline for the country is 4.56 mio. bpd of crude.

Tonight, the weekly oil rig count from Baker Hughes is published. The number of active drilling rigs has increased steadily for months as oil prices inched upwards; now, with the recent oil price drops, it will be interesting to see if shale oil drillers will start shutting some oil taps as production becomes less lucrative. The current number of active rigs has almost doubled compared to one year ago, but around 1/4 lower than 2 years ago.

Turning to the economic data front, yesterday saw improved U.S. jobs data while the Philadelphia Fed Manufacturing Index dropped (to 32.8 from 43.3). The Bank of England kept interest rates unchanged.

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A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.