Oil up as Kuwait revives hope for output freeze deal

[SINGAPORE] Oil prices climbed in Asia on Wednesday after Kuwait said an agreement to freeze output during a producers' meeting this month could still be reached despite conflicting statements by participants.

But analysts said the rebound would not likely last owing to a painful supply glut and weak demand caused by the slowing world economy.

At around 0815 GMT Wednesday, US benchmark West Texas Intermediate for delivery in May was up US$1.03, or 2.87 percent, at US$36.90 and Brent crude for June was 72 cents, or 1.90 per cent, higher at US$38.59.

Both contracts eked out an increase on Tuesday, but prices are still well below the US$40 level reached last month following a rally driven by hopes of an agreement during the upcoming April 17 producers' meeting in Doha.

Prices dived after Saudi Deputy Crown Prince Mohammed bin Salman said last week his country would only agree to limit output if rival producers, such as Iran, followed suit.

But Iran, which has been raising production since the West lifted nuclear-linked sanctions in January, has insisted it should not be the one to cut back.

Key Opec member Kuwait, however, said a freeze deal could still be reached without Tehran, Bloomberg News reported.

It quoted Kuwait's Opec governor, Nawal al-Fezaia, as saying that major producers had no option but to reach an agreement and that a freeze could set a floor price.

Ric Spooner, chief market analyst at CMC Markets in Sydney, said traders were likely to wait for the results of the meeting before making big bets.

"Given the welter of statements... people are probably just going to ignore (the comments) until they get the results of the meeting," Mr Spooner told AFP.

Comments by IMF chief Christine Lagarde - that global economic recovery is still "too slow" and "too fragile" - further added to the gloom in the saturated oil market as it was bad news for demand, analysts said.

AFP