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Oil inches up after mixed IEA report ahead of Doha meeting
[NEW YORK] Oil prices rose slightly on Thursday in choppy trade as the market processed a mixed report from the International Energy Agency (IEA) and skepticism that an upcoming meeting of major producers would do much to tighten the supply demand balance.
Brent crude futures were up 17 US cents at US$44.35 a barrel by 12:20 pm EST (1620 GMT). US crude rose 15 US cents to US$41.91.
Activity in the market has been muted with no clear players, traders said, due to the uncertainty ahead of a keenly anticipated producers' meeting on Sunday in Doha, Qatar, of the world's biggest oil exporters, including Saudi Arabia and Russia.
They are set to finalize a deal reached in February to freeze oil output at January levels, aiming to bolster oil prices.
"No real axe to grind today. I do believe tomorrow can be busy ahead of the weekend," one trader said.
The IEA, which coordinates the energy policies of industrialized nations, trimmed its estimate for 2016 global demand growth from last month to 1.16 million barrels per day (bpd), but said a much-anticipated slide in production in the United States was gathering pace.
"If there is to be a production freeze, rather than a cut, the impact on physical oil supplies will be limited," the IEA said in its monthly report.
Many analysts concur and think traders could be disappointed after the meeting.
"I think the market is really looking ahead to Doha," said Michael Tran, director of energy strategy at RBC Capital Markets in New York.
"An agreement to freeze production does little to change physical balances, but constructive rhetoric could serve as a sentiment changer at a minimum, helping to legitimize the current rally and have the market hold the US$40 a barrel level as the new psychological floor."
Oil found some support after US economic data pushed the US dollar to session lows. A weaker US dollar is a plus for oil, making it more affordable to holders of other currencies.
In the previous session, oil fell after Russian oil minister Alexander Novak told a closed-door briefing of energy analysts in Moscow that a deal in Doha would be loosely framed with few detailed commitments.
"The agreement will not be very rigidly formulated, it is more of a gentlemen's agreement," one of those present said, paraphrasing Mr Novak's words at the briefing.
"There is no plan to sign binding documents," another person at the briefing said.