Hopes for a coordinated cut in crude oil output between OPEC and non-OPEC producers have been unceremoniously laid to rest by comments made by Saudi Arabian oil minister, Ali Ibrahim Al-Naimi.

Speaking at the IHS CERAWeek conference in Houston, Texas, Mr Al-Naimi explained the timetable for a far-reaching deal on a production freeze but dismissed production cuts saying “[they] are not going to happen”.

Oil prices fell following his comments in a kneejerk reaction but pared losses on signs of stronger demand in economic data released shortly afterwards.

“This really shouldn’t come as a surprise to investors,” remarked Mayuki Hoda, a senior commodities researcher at Mizuho Corporate Global. “Did anyone really think that the Saudis were going to let high-cost producers in the US off the hook by cutting production? They’ve spent billions of dollars of their foreign currency reserves making up for the fall in revenue from oil sales as they try to put US shale oil producers out of business.”

Oil prices are off their lows where they flirted with $26 a barrel and are now trading at just north of $32 a barrel but Mizuho Corporate Global doubts that a production freeze will significantly reduce the oversupply problem.

“Exporters are producing about 2 million barrels a day more than the world needs so even if a cap is placed on production, we’re still going to be stockpiling supply so there’s little supporting a rally unless we get some real, concrete evidence of greater demand,” concluded Hoda.

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