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Saudi oil minister says oil market fundamentals improving

Saudi Energy Minister Khalid al-Falih said on Tuesday that oil market fundamentals were improving after an agreement struck with top oil producers to curb supply and end a two-year glut took effect. The kingdom led a pact between the Organization of the Petroleum Exporting Countries and non-OPEC producers, such as Russia and Kazakhstan, to cut global crude output by about 1.8 million barrels per day from Jan. 1, and bring supply closer to demand. Saudi Arabia had cut beyond what it had pledged in the agreement and brought the kingdom's output below 10 million bpd, he said. Global oil demand would grow by 1.5 million bpd in 2017, and increased output from the United States, Brazil and Canada would be more than offset by natural declines in aging fields, he said. Oil inventories worldwide had fallen "slower than I thought," in the first two months of the year, Falih told energy executives and oil officials gathered at the CERAWeek industry conference in Houston. Inventories in developed countries remain about 300 million barrels above the norm, he said. Still, it was premature to consider whether or not the cuts should be continued into the second half of the year, he said. OPEC next meets in May, he said. On Monday, oil ministers from fellow OPEC member Iraq and non-OPEC Russia also said it was too early to discuss extending the deal, while the head of Angola's state oil firm said she thought curbs should continue.

"There is also cause for cautious optimism as we see the 'green shoots' of the recovery," Falih said, but "We should not get ahead of the market."Greater price arbitrage between east and west oil markets that "indicate the cuts are biting," he said. U.S. crude cargoes have increasingly flowed to Asian buyers as the market has tightened. Addressing many top executives of U.S. shale producing firms who Saudi Arabia targeted in a two-year price war that aimed to drive many of them out of business, Falih warned there would be "no free rides" for non-OPEC producers. OPEC would not let rival producers take advantage of the cuts to underwrite their own production investments, he said.

While Saudi Arabia welcomed increased output from shale producers to help meet rising supplies, he cautioned that a fast-response from shale could be discouraging investment in multi-year, long-term projects in other oil sources. Falih said he was concerned that investment in those projects was falling behind what was needed to meet future demand increases. Demand continued to grow in the developing world and predictions that the world would soon reach peak demand were "misguided" and not helping encourage investment, he said. The market could absorb between 3 million and 5 million barrels of new oil over time because demand is improving, he told CNBC. He did not specify over what period. Saudi Arabia does not want OPEC to intervene in the oil market to address long-term structural shifts, but to address "short-term aberrations," he said.

WORKING WITH THE U.S. He praised the administration of U.S. President Donald Trump for its focus on energy issues, citing its "pro-business and pro-petroleum" policies. "We look forward to working with the new administration," he said. Saudi investment in the U.S. is vast, and Saudi efforts to reduce global oil market volatility were of direct benefit to the U.S. oil industry, he said. Falih also said the initial public offering of Saudi Aramco remains on track and "we expect it to take place in 2018." The IPO could value the energy giant at between $1 trillion and $1.5 trillion, analysts have estimated.

Wall Street slips with healthcare stocks, Nasdaq flat

U.S. stocks slipped on Thursday pressured by healthcare shares as traders cashed in gains from one of the best performing sectors so far this year. Proposals in President Donald Trump's budget signaled higher regulatory costs for the sector and a cut in federal funding for medical research. Though still a ways away from becoming a reality, they gave traders a reason to sell. The S&P 500 healthcare index . SPXHC dropped 0.9 percent. Financials . SPSY outperformed in a rebound after the sector was the worst performer on Wednesday and as the benchmark U.S. Treasury note yield rose, while utilities . SPLRCU weakened. Biogen (BIIB. O) weighed down the S&P 500, falling 4.7 percent to $278.96 after two brokerages downgraded the stock.

"Healthcare is being dragged down by equipment and supplies, biotechnology, and tools and services. These sectors have actually done quite well year-to-date, so this is just a little speed bump," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin."There’s a push and a pull with these stocks as the President has promised to accelerate the (drug and device) approval process, but now he’s proposing to cut the budget of the FDA, which could make it difficult to get expedited approvals."

The Dow Jones Industrial Average . DJI fell 15.55 points, or 0.07 percent, to close at 20,934.55, the S&P 500 . SPX lost 3.88 points, or 0.16 percent, to 2,381.38 and the Nasdaq Composite . IXIC added 0.71 point, or 0.01 percent, to 5,900.76. Oracle (ORCL. N) surged to a record high of $46.99 before closing up 6.2 percent at $45.73, after it posted a better-than-expected quarterly profit. Tyson Foods (TSN. N) slipped 1.7 percent to $62.00 on news that a form of bird flu that is highly lethal for poultry had infected a second farm that supplies Tyson.

Advancing issues outnumbered declining ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored advancers. The S&P 500 posted 52 new 52-week highs and one new low; the Nasdaq Composite recorded 145 new highs and 52 new lows. About 6.60 billion shares changed hands in U.S. exchanges, below the 6.96 billion daily average over the last 20 sessions.