US crude oil prices were steady in early Asian trading on Tuesday after lower domestic production as well as dipping output from OPEC tightened the market just as China further eased its monetary policy in a bid to boost consumption.
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International Brent futures were at $35.15 a barrel, up 5 cents from their last close.
Oil prices dropped on Wednesday in the wake of industry data that showed a huge build in U.S. crude stockpiles.
USA crude’s West Texas Intermediate (WTI) futures (CLc1) finished up 26 cents at $34.66 a barrel.
Despite the losses, crude prices have trended higher in the last fortnight since hitting 12-year lows under $30 a barrel between late January and mid-February.
“We believe prices will see modest gains over the course of the year and we have likely seen the worst of price declines, unless the global economy actually moves into recession”, said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, who helps manage some $125 billion.
Saudi Arabia, working with Venezuela and Qatar and non-OPEC producer Russian Federation on a plan to freeze oil output at January highs, pledged to “remain in contact with all main producers in attempt to limit volatility” in crude prices.
“It seems more likely that $26 is in the rear view mirror at the moment”, Headrick said.
The Islamic republic is seeking to regain market share after sanctions were removed last month upon completion of an agreement limiting its nuclear program. Separately, a survey from Reuters showed that OPEC supply declined slightly this month, providing a glimmer of hope that oil could be on the verge of halting a 20-month downturn where prices have tumbled more than 70% from June, 2014 highs of $115 a barrel.
In recent weeks, however, OPEC and outside producers stepped up diplomatic activity to address the supply glut.
Outside of these two producers, output from OPEC countries are expected to remain flat or decline. This resulted in a narrowing of the WTI-Brent spread.
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“We could be in store for another large move down over the next few weeks”, said Tariq Zahir at Tyche Capital Advisors who bets nearby WTI contracts will weaken against forwards.
