World oil prices surged higher Monday as China boosted efforts to tackle its slowing economy and Saudi Arabia welcomed cooperative action to stabilize the market.
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The amount of open positions in USA crude contracts betting on a further fall in prices has dropped to about 17 per cent since mid-February.
Meanwhile Brent futures were up 3 cents at 36.96 a barrel.
Data released by the American Petroleum Institute (API) revealed that crude inventories in the USA increased by 9.9 million barrels last week.
According to the EIA, crude oil production in Iraq, including fields in the country’s northern Kurdistan Region, averaged 4 million barrels per day (MMBPD) a year ago.
Immediately after the data oil price fell.
US West Texas Intermediate (WTI) crude futures were trading at $33.78 per barrel at 0442 GMT, up 3 cents from their last settlement. The U.S. Energy Information Administration will issue official inventory data on Wednesday. Saudi Arabia, Russia, Venezuela and Qatar tentatively agreed on February 16 to cap production at January levels.
Crude oil prices have moved higher in previous sessions in response to proposals from major producers Saudi Arabia, Russia and others to freeze their output of oil at January levels. “Both crude oil and iron ore prices hit a one-month high overnight”.
“Oil prices are up due to the Chinese reserve ratio requirement cut and reports on dropping oil production”, said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. The oil market “could drown in oversupply”, as the International Energy Agency (IEA) warned in January, and global prices are at their lowest level since 2003, so all petrostates are bleeding.
At the same time, financial speculators have sharply raised their bullish bets on oil after talk of a global production freeze and signs of falling US shale crude output and growing gasoline demand. Iran has confirmed that it won’t join and will continue to pump until its production returns to about 4 million barrels a day.
“Credit expansion is not a long-term solution to China’s growth slowdown but would likely support growth this year – and remove some of the concern that has been driving oil prices lower”, he said.
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The kingdom’s oil minister Ali al-Naimi said last week a supply cut was not being considered but the production freeze was the first step to balancing the market.
