In the meantime, fundamentals were also adding their weight into this downward slide. The woes of the market were further underlined when a report from the UK consultancy Oil Movements, showed, seaborne oil exports by OPEC excluding Angola and Ecuador, were set to rise by 70,000 barrels per day in the four weeks to April 3.

All this was indeed just enough to take the steam out of the crude balloon. And so it did.

And though the just concluded OPEC ministerial meeting agreed on maintaining the output level at the current levels, yet, OPEC has been pumping oil well above its output targets. Thus when the OPEC oil ministers met last Wednesday in Vienna to review the market, indications had started to emerge that crude markets were inclined to stabilize at a level around 80 and not much beyond.

From the producers' view, given the circumstances, if this could be maintained, this was to be a major achievement. Even at the highest level, Custodian of the Two Holy Mosques King Abdullah had conceded months back that a price of around $75 is "fair" - to both - the producers as well as the consumers. And thus when the ministers gathered in Vienna, they appeared contended. Minister of Petroleum and Mineral Resources Ali Al-Naimi underlined, "good demand, reliable supply and beautiful prices" marked the global crude markets. What else one could have asked for?   

And it was not only Saudi Arabia satisfied with the existing situation, Iran and Venezuela - the so called hawks within the OPEC on the issue of output and pricing, had also conceded before the meeting that they were pleased with the current prices.

"While the global economy is clearly rebounding from the late 2008 and early 2009 recession, with continued positive signals coming from the manufacturing and services sectors, serious threats remain," an OPEC statement thus said after the meeting.

"The downside risks include the mounting and potentially unsustainable public debt in the most advanced economies; a degrading fiscal position which might lead OECD governments to tighten fiscal and monetary policy, rising unemployment; weak demand; persistent global imbalances; and rising protectionism." And it was in the light of the above that the OPEC decided to maintain output levels.

Crude markets were seen faltering, in the immediate aftermath of the OPEC decision. US inventories were also reported to have risen last week for a seventh week to 344 million barrels, pointing to weak demand.

"We are still seeing oversupply in the western economies," Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney, said. "US fuel demand is looking slightly better than a year ago, but it's far from being a tight market."

Another interesting point that Al-Naimi too underlined was that producers were finally moving ahead with new investments (in the sector). Oil production capacity continues to edge up in many places, such as Iraq, Angola and offshore Nigeria. The biggest prospect for additional OPEC oil though currently lies with Iraq. Abu Dhabi and Kuwait are also planning production projects. Libya too is proceeding with plans to bolster production capacity, Shokri Ghanem, the chairman of Libya's National Oil Corp., said in a statement.

OPEC thus plans to add 12 million barrels to its daily production capacity by 2015. And it is worth pointing out that the gains would exceed the expected growth in demand, as per the International Energy Agency.

Drilling activity within the OPEC too is going on at the fastest rate in 2 1/2 years. The 12-nation group boosted its number of oil and gas rigs by 8.4 percent in January and February, the biggest two-month gain since June 2007, Baker Hughes Inc. said. Nigeria increased its oil rigs the most among OPEC member states in February, boosting the count to 12 from seven. OPEC as a group has taken on an extra 22 rigs this year, raising its total to 283, as increases in Africa compensate for a reduction in Saudi Arabia and Venezuela, the Baker Hughes data showed. Producers outside of the organization have added the same number to total 785 rigs, a gain of 2.9 percent.

Members are also reviving some of the 35 projects delayed by the recession, OPEC Secretary-General Abdalla El-Badri said in December. Saudi Aramco's Manifa heavy oil field was also "back on track" for completion in 2015, after being halted earlier, the Paris-based IEA said.

Increased drilling will have greater pull on prices in the years ahead than in the rest of 2010; IEA Executive Director Nobuo Tanaka emphasized in a March 10 interview.

And in the meantime, the production from the 11 OPEC members bound by quotas rose to 26.811 million bpd in February, the organization said in a March 10 report. Shipments are also to increase 0.9 percent by the end of the month, a report by Oil Movements said.

And yet despite the OPEC output restraint there should be little upward price pressure (on crude markets) from market fundamentals, the March Monthly Oil Report of the London based Centre for Global Energy Studies says. And indeed it is difficult to argue on that, one has to concede.

What a transformation in market sentiments indeed!