Oil surges on optimism for economic stimulus, Opec+ meeting

[NEW YORK] Oil rose, reversing earlier declines, as the European Central Bank said it may pump more stimulus into the region's economy and Organization of Petroleum Exporting Countries (Opec) and its allies made progress in setting a date to discuss an extension to supply cuts.

Futures gained as much as 4.5 per cent in New York. Opec and its allies have shifted their focus to mid-July for the next meeting to discuss extending production cuts, after talks between Russia and Iran made some progress toward resolving a standoff over the date.

"Europe sold oil this morning on a stronger dollar, and now the US is buying the market on more stimulus expectations,'' said UBS AG analyst Giovanni Staunovo.

West Texas Intermediate for July delivery rose US$2.24 to US$54.17 a barrel on the New York Mercantile Exchange as of 11.07am New York time.

Brent for August settlement gained US$1.75 to US$62.69 a barrel on London's ICE Futures Europe Exchange. The global benchmark crude traded at a US$8.29 premium to WTI for the same month.

After a meeting on Monday, Opec and its allies appeared to be moving toward mid-July as a possible date for the next meeting to discuss output cuts. Their failure to agree on a date has given turbulent oil markets little reassurance about the future of production cuts amid an overall slump in crude prices in recent weeks. Iran said Monday it was willing to hold a meeting July 10-12. The group had originally planned to meet next week.

The dispute over the timing of the meeting is playing out amid a broader geopolitical confrontation as Saudi Arabia accuses Iran of complicity in attacks on the two oil tankers. Iran has denied culpability.

BLOOMBERG