Oil ministers’ meeting over too soon, actions punitive

Well, that was fast. May be a little too fast.

Much awaited oil ministers meeting that brought two of world's largest producers, Saudi Arabia and Russia thousands of miles from their homeland in Doha, Qatar, lasted just about an hour and the resolutions that seems to have been adopted can be seen as punitive, compared to the glut seen across global markets.

The ministers have agreed to keep production at the levels of January.

In January, Russia produced little more than 10 million barrels of crude oil per day. Saudi Arabia's production has also been above 10 million barrels. Even at this production level, world is awash in oil and surplus is about 2 million barrels/day. Any drop in non-OPEC production, which is estimated to drop by 600,000 barrels/day will be compensated by similar rise in production and exports from Iran.

Today's adoption is similar to no adoption because at current price both the countries have only limited space to increase production.

With large surplus in the market and storage higher than 3 billion barrels across developed countries, today's meeting was more of over expectations and under deliver.

WTI is declining sharply and currently trading at $29.7 per barrel and Brent $4.2/barrel premium.