Oil Futures Rise on Hopes for Output Freeze
London/Singapore: Crude futures rose on Wednesday as hopes for an agreement among exporters to freeze output underpinned the market, although persistent global oversupply and Iran's plans to boost production pressured physical oil prices.
Oil futures recovered from one-month lows to end the previous session up after Kuwait said there were "positive indications an agreement will be reached" on output during a producer meeting scheduled for April 17 in Qatar.
US crude futures rose more than a dollar, or 3 per cent, to trade at $36.95 per barrel at 1030 GMT (4:00 p.m. in India). International benchmark Brent futures rose as much as 90 cents to trade at $38.77 a barrel.
"Oil (futures) gained some momentum. The comment by the Kuwait OPEC governor provided some support to prices," ANZ bank said, but warned that investors would likely remain cautious ahead of the April 17 meeting.
An initial output freeze agreed in February has helped oil prices rise from a 12-year low close to $27 a barrel seen in January.
However, prices have fallen in recent days on doubts that a wider deal will be reached, largely because Iran has so far said it has no intention of slowing its production after crippling sanctions against it were lifted in January.
Iranian Oil Minister Bijan Zanganeh said the country's crude output would reach 4 million barrels per day (bpd) by March 2017, state television reported on Wednesday, with plans to export 2.25 million bpd of those supplies.
That would be up from exports of as little as 1 million bpd under the sanctions and only slightly below pre-sanctions peaks of 2.5 million bpd.
With Iran's exports rising and other producers pledging to freeze output near record-high levels, an agreement would do little to address a global supply overhang that sees at least a million barrels of crude produced every day in excess of demand.
The ample supplies were reflected in physical markets, with Abu Dhabi cutting its March retroactive official selling price (OSP) premium over benchmark Dubai crudes by 64 cents to $3.06 per barrel.
This followed top exporter Saudi Arabia lowering its May Arab Light crude OSP by 10 cents per barrel to a discount of $0.85 per barrel to the Dubai average.
The US government releases its weekly oil inventories report later on Wednesday. Data from the American Petroleum Institute showed on Tuesday US crude stocks fell last week as refineries boosted output and imports fell sharply.