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Oil prices jump on expectation that producers will agree output freeze
[SINGAPORE] Oil prices rose in early Asian trading on Wednesday, supported by rising expectations that exporters will agree on freezing their output amid global oversupply.
The Kuwaiti governor for the Organization of the Petroleum Exporting Countries (OPEC), Nawal Al-Fuzaia, said on Tuesday that there were "positive indications an agreement will be reached" during a producer meeting scheduled for April 17 in Qatar.
Front month US West Texas Intermediate (WTI) crude futures were trading at US$36.74 per barrel at 0030 GMT, up 2.3 per cent, or 85 cents, from their last settlement.
International Brent futures were up 1.7 per cent at US$38.50 a barrel.
"Oil gained some momentum. The comment by the Kuwait Opec governor provided some support to prices," ANZ bank said on Wednesday, but warned that investors would likely remain cautious ahead of the April 17 meeting.
A preliminary producer agenda, seen by Reuters, that has been sent to invited nations by the meeting's host Qatar indicated expectations for a short gathering lasting 4 hours, including just 30 minutes slated for a debate on approving the deal.
An initial output freeze agreed in February has helped oil prices rise to almost US$38 a barrel from a 12-year low close to US$27 in January.
Still, 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.
A freezing of production at current high levels would also do little to address a global supply overhang that sees at least a million barrels of crude produced every day in excess of demand.
Meanwhile, traders said that a weakening dollar was also supporting oil as it makes dollar-traded fuel imports for countries using other currencies cheaper. The greenback has fallen 5 per cent since January against a basket of other leading currencies.
Dutch bank ING said that technical market indicators implied that oil prices had developed a bottom near recent lows but that the "short-term upside is limited".