Hong Kong: Oil extended gains above $31 a barrel as Iran supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels, without saying whether it would curb its own output.
Futures climbed as much as 3.5% in New York after rising 5.6% on Wednesday. Iran backs any measures to stabilize markets including the output cap, oil minister Bijan Namdar Zanganeh said after talks with Qatar, Iraq and Venezuela, according to a report from the Shana news service. US crude stockpiles are forecast to have increased by 3.5 million barrels last week, according to a Bloomberg survey before government data Thursday.
Oil is still down 16% this year after the Organization of Petroleum Exporting Countries effectively abandoned output targets in early December and as US crude inventories swelled to the highest level since 1930. Zanganeh didn’t mention if Iran, the second-biggest Opec producer before sanctions were intensified in 2012, would deviate from plans to restore exports after the lifting of penalties last month.
“The risk of continued supply growth and potential ballooning of inventories is diminishing slightly, which is enough to halt the build in shorts,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd in Sydney, said by phone. “There is no expectation whatsoever that Iran will curb exports. Until we see the fundamentals improve, we’re not going to get a sustainable uplift in the price.”
West Texas Intermediate for March delivery rose as much as $1.06 to $31.72 a barrel on the New York Mercantile Exchange and was at $31.28 at 9:11 am Hong Kong time. The contract advanced $1.62 to $30.66 on Wednesday. Total volume traded was about 17% above the 100-day average.
Brent for April settlement increased as much as 49 cents, or 1.4%, to $34.99 a barrel on the London-based ICE Futures Europe exchange. Prices added $2.32 to $34.50 on Wednesday. The European benchmark crude traded at a premium of $1.41 to WTI for April. Bloomberg
