Perth: Oil rose over 2% to near $47 a barrel on Monday, extending the previous session’s gains of over 4%, thanks to a weaker US dollar and optimism that Opec would cut output again at this month’s meeting.
US crude for April delivery rose $1.21 to $46.73 a barrel at 0010 GMT, adding to Friday’s gains of $1.91.
London Brent crude rose 58 cents $45.43 a barrel. It was the first time since 11 December, 2008 that NYMEX crude has gained a premium over Brent at the settlement.
“The US dollar has moved lower a little bit this morning and we are getting closer to the Opec meeting on 15 March, so I guess those factors are offering support,” said David Moore, an analyst at the Commonwealth Bank of Australia.
The dollar slid lower versus the euro on Monday, adding to the last session’s decline, as investors locked in gains and pared back safe-haven trades on the greenback.
Further encouraging oil’s gains were comments from Opec’s secretary general, who said on Friday that low oil prices could provide economic stimulus in the short term, but at the cost of a supply shortfall in future due to low investment.
Opec member Venezuela also said it would propose another output cut if needed as the cartel prepares to meet on 15 March, echoing comments from some other members.
The group has already agreed to cut production by 4.2 million barrels per day since September, and a Reuters survey found that members have met 81% of their output reductions as of last month.
In a sign that oil investors were banking on Opec to further cut output at this month’s meeting, there were fewer open interest positions at the $25, $30 and $35 put options on the NYMEX April crude oil contract versus the previous week, according to Reuters data on Friday.
Open interest positions remained bulked at the $50 and $55 call options, with more at $55 than the previous week.
Renewed threats from Iran, the world’s fourth-largest oil exporters, could also have offered support to prices, analysts said.
Iran has test-fired a new air-to-surface missile, Iranian media reported on Sunday, in the Islamic Republic’s latest display of its military capability.
Tehran has sufficiently mastered nuclear technology to be able to produce a bomb if it choose, Israel’s military intelligence chief was quoted as saying on Sunday.
Crude oil speculators on the New York Mercantile Exchange shifted to a net short position in the week to 3 March, according to data from the US Commodity Futures Trading Commission released on Friday.