Brent for May settlement decreased 29 cents, or 0.8 percent, to $36.28 a barrel on the London-based ICE Futures Europe exchange.
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Tim Evans, analyst at Citi Futures, said the oil market gained “apparent support from a Venezuelan statement promising a meeting between 15 or more oil producers ‘soon'”. A Reuters report today pointed out the likelihood of the organization agreeing to cut production to drastically low levels.
Non-OPEC supply is forecast to fall by 850,000 barrels a day this year, of which 760,000 barrels will be cut from U.S. production.
Oil is still down about 6 per cent this year on speculation a global glut will be prolonged amid brimming U.S. stockpiles and the outlook for increased exports from Iran after the removal of sanctions.
West Texas Intermediate for April delivery fell 9 cents to close at $US34.57 a barrel on the New York Mercantile Exchange.
USA crude inventories rose 2 percent last week, or 10.4 million barrels, to a fresh record of 517.98 million barrels last week.
A Bloomberg News survey ahead of Wednesday’s Energy Information Administration (EIA) report showed that U.S. crude stockpiles probably increased 3.4 million barrels from an 86-year high last week.
SINGAPORE – Oil prices edged higher on Thursday as sentiment spread that a 20-month-long market rout is coming to an end as production slows amid strong demand.
Some analysts think the market will not sink back to 12-year lows hit in mid-February, when USA crude fell to around $26, and Brent traded at just above $27.
The bank added, though, that this would do little to rein in a global production overhang, which is estimated at between 1 million to 2 million bpd and is accompanied with a “deceleration in demand growth”. The action suggests that the market is getting more convinced that we are near a market bottom due to more signs of falling oil production and the potential for a production freeze.
Markets shouldn’t expect any cuts in Saudi production, Ali al-Naimi, the kingdom’s oil minister, said in a speech in Houston last month. Saudi Arabia, Qatar, Venezuela and non-OPEC producer Russian Federation said on February 16 they would freeze output at January’s highs.
Even if the agreement succeeds in raising prices in the short-term, analysts say the flexibility of the US shale industry would prevent a sustained rebound.
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This is nearly astounding considering the fact that the supplies oil of in the US are at the highest level since the great depression.
