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Oil prices rally on Saudi-Venezuela talks
[TOKYO] Crude prices rebounded in Asia on Monday news that the oil ministers of Saudi Arabia and Venezuela had held talks on stabilising the beleaguered market raised hopes of production cuts.
However, a pick-up in the dollar weighed on the commodity, with a drop in US unemployment and improving wage growth fuelling talk that the Federal Reserve could lift interest rates again next month.
And analysts warned there was unlikely to be a strong rally in prices for some time owing to the global supply glut and weak demand.
At around 0800 GMT, US benchmark West Texas Intermediate for delivery in March was 21 cents, or 0.68 per cent, higher at $31.10, while Brent crude for April was 20 cents, or 0.59 per cent, down at $34.26.
Major exporter Saudi Arabia announced discussions between Ali al-Naimi and his Venezuelan opposite Eulogio Del Pino Sunday to discuss the South American country's talks with other producers to boost prices.
The plunge in oil prices to 12-year lows - owing to a severe supply glut, weak demand and the strong dollar - has hammered producer nations such as Venezuela and Nigeria which rely on the commodity's income to fuel their economies.
However, the OPEC producers' group - of which Saudi Arabia is the key member - has refused to cut output as it looks to maintain market share in the face of competition from US shale.
WTI is down almost 20 per cent this year and Brent more than 10 per cent.
"There are very little signs of abatement on the supply side," Michael McCarthy, a chief strategist at CMC Markets in Sydney, told Bloomberg News.
And Ian Taylor, chief executive of Vitol Group BV, the world's largest independent oil trader, said: "It's hard to see a dramatic price increase." He tipped prices to move between $40 and $60 a barrel over the next decade.
The dollar climbed after the Labor Department said Friday that the US jobless rate had fallen to an eight-year low and wage growth picked up.
That fuelled speculation of another Fed rate hike, which attracts investors to the dollar. A strong greenback makes dollar-priced oil more expensive for customers using weaker currencies.