No Short Term Gains From Russia, OPEC Talks

The talks were said to have created "the framework for Russia and Saudi to sit down and talk"

Consultations on the deal to freeze oil output between Russia, Saudi Arabia, Venezuela, and Qatar are said to be concluding this week, but two analysts doubt the outcome will have much impact on the oil market apart from an initial lift.

Edward Bell, a commodity analyst at Emirates NBD, told reporters in the wake of Russia stating that consultations should  wrap by March 1, "I doubt very much this will have an impact on the market that will drive prices up where lot of Organization of the Petroleum Exporting Countries (OPEC) producers need them to be.

"It might boost prices little bit, but it is not going to have a lasting impact in supporting prices probably over the next couple of months."

Francisco Quintana, head of economic research at Asiya Investment, said a wide-ranging agreement is "unlikely, due to Iran's reluctance but also because of the deteriorating relation between Saudi and Russia; but even if it happened, its impact in the market would be marginal."

However, both analysts concede that the widely criticized deal may not entirely be without benefit: "This is the first step in a process of some kind of negotiations on how the oil market should rebalance from policy standpoint," said Bell.

Quintana remarked, "The most positive aspect from this agreement is that it has created the framework for Russia and Saudi to sit down and talk, which, in the future - not now - might be used to cut production."

Meanwhile, a new Reuters survey reportedly "found stable output" in Saudi Arabia, an early indicator that it is following through on the output freeze; this, along with China cutting its reserve requirement ratio, caused Brent futures on February 29 to trade at $35.97 per barrel, up 87 cents.

Barclays was quoted as saying that, "There are tentative signs the worst may be over for commodities, at least judging by the pick-up in investor sentiment."

Still, it's anyone's guess if a sustained rally is in the offing, or if, as Goldman Sachs Group Inc. has predicted, the oil glut will keep crude prices low for the next 15 years.