But the speed of the recovery – and the fragile drivers behind the move – are raising questions over whether the rebound can truly last. “The market was very encouraged by the proposal”. “We could continue to see volatility”, said Nasdaq’s energy team director Tamar Essner. The global benchmark crude was at a premium of 46 cents to WTI for May.
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The initiative was supported by around 20 OPEC and non-OPEC producers, accounting for about 73% of global oil production, according to Venezuela’s Oil Minister.
Kuwait plans to take part in the meeting, acting oil minister Anas al-Saleh said on Wednesday.
Many analysts think there is still steam in the rally.
But Standard Chartered said supply concerns due to non-OPEC production cuts could drive prices above $60 a barrel by the end of the year. It’s down less than 75 points year to date, up from a stunning loss of almost 2,000 points at one point.
Iraq has agreed to the freeze saying that it has endured quite a lot of hardship given the steep fall in the price of oil, a resource it is heavily dependent on, as it struggles to combat the threat posed by Islamic State. It was unsustainable and driven by speculation. Hewson also highlighted the dollar’s weakness as being supportive for crude oil. The number of rigs drilling for oil, viewed as a rough proxy for activity in the energy industry, fell by six to 386 in the latest week, the lowest level since 2009. The rig count has fallen the past 12 weeks while total oil and gas rigs were the fewest since at least 1940. Both markets have surged since touching decade-plus lows early this year.
Brent for May settlement climbed as much as $1.02, or 2.5 percent, to $41.35 a barrel on the London-based ICE Futures Europe exchange.
“People are realising that exports for March and April are going to be big”, said Dominic Haywood, an analyst with Energy Aspects.
Essner argues that what matters is how long oil stays at depressed levels below $50.
Data released Wednesday morning in the US showed production there falling.
The countries are seeking coordinated action because they are reluctant to give up market share to other producers. That will only deepen the supply glut.
Societe Generale revised its crude price forecasts lower.
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The ministry also said the average price for Urals crude oil for the monitoring period from February 15 to March 14, 2016 amounted to $33.38 per barrel, or $243.7 per ton.
