Saudi Arabia signals cooperation, doubts persist

Saudi Arabia, finally may be ready to cooperate to bring balance to oil market. In a report released by Saudi Cabinet says that Saudi Arabia is willing to cooperate with OPEC and non-OPEC producers. OPEC members are scheduled to meet in Vienna next month to decide over cartel's strategy.

For the whole year, weaker and poorer members of the cartel has been calling for Saudi Arabia to cooperate and bring balance to the market. So after today's statement, speculation will slowly rise that some message of cooperation to appear in cartel's Vienna congress.

Brent suddenly jumped from $43.5/barrel to as high as $45.7/barrel, on the news, however scaled back the gains soon enough as sellers remain confident over oversupply in the market.

An oversupply of 1.6-2million barrels/day are not easy wipe out without much larger production cut, which at this point looks difficult.

Moreover, Saudi Arabia may not follow up on its commitment as it fight Russia, largest producer outside OPEC over market share in Europe. Even if Saudi Arabia is willing to cooperate, Russia might not, which is producing at fastest rate since the time of Soviet Union.

Brent is currently trading at $44.5/barrel.