Oil rises on optimism over output freeze deal
Oil prices rose Tuesday on increasing optimism over a recent output freeze deal that would curb the stubborn global supply glut, traders said.
At around 1700 GMT, the US benchmark West Texas Intermediate (WTI) for delivery in April climbed 67 cents to stand at $34.42 (31.7 euros) per barrel.
In London, Brent North Sea crude for May advanced 39 cents to $36.96 a barrel compared with Monday's close.
The market advanced as key oil producer and non-OPEC member Russia repeated its support for an output freeze deal which is aimed at curbing a supply glut that has sent prices crashing since mid-2014.
Russian oil groups have agreed to freeze production levels as proposed last month by Moscow and Saudi Arabia to curb a near-record slump in prices, President Vladimir Putin declared Tuesday.
Opening a meeting with oil group chiefs, he said Energy Minister Alexander Novak had led discussions on forging an agreement between producer countries to maintain their output.
"As the minister reported to me, you all agree with this proposal," Putin told them in comments released by the Kremlin.
He said the idea was to "fix Russia's 2016 production level at that of January," which was a post-Soviet record of 10.8 million barrels per day on average.
OPEC kingpin Saudi Arabia and Russia -- two of the world's biggest oil producers -- proposed after a February 16 meeting with Qatar and Venezuela that all producer nations freeze output at January levels to support prices, provided other major players followed suit.
The news sparked hopes the market would stabilise after sinking to near 13-year lows on the stubborn supply glut -- but disappointed those looking for an output reduction.
The United Arab Emirates, which is a member of OPEC, also voiced its support for stable output.
Emirati Oil Minister Suhail al-Mazrouei said stable production is needed if oil prices are to rebound from current ultra-low levels.
"I believe that current prices will force everyone to stabilise production" at January levels, Mazrouei was cited as saying by the state news agency WAM.
"Holding production is no longer an option but a necessity that everyone should consider."
Mazrouei added Tuesday that if production was stabilised, "we will see the results" on the market.
The Organization of the Petroleum Exporting Countries (OPEC) refused twice last year to alter output, despite tumbling prices that have ravaged revenues, as it sought to hurt high-cost US shale producers.
Oil had rallied sharply last week on hopes that top producers will cut output.
The market jumped as OPEC nation Venezuela said his country was preparing to meet other producers in March to discuss ways to stabilise the market.
However, Riyadh, OPEC's largest oil producer, has since ruled out a production cut and Iran has dismissed joining a freeze.
- 'Between rock and hard place' -
City Index analyst Fawad Razaqzada said traders were torn between tightening global oil production and falling US drilling rig counts -- and abundant crude inventory levels in the United States.
"Oil prices are stuck between a rock and a hard place," Razaqzada told AFP on Tuesday.
"On the one hand, the consistent falls in US rig counts and the prospects of a production freeze between Russia and the OPEC point to a tighter oil market, while on the other hand, US oil inventories continue to climb to fresh record levels.
"Consequently, some traders are happy to be buying the dips while others try to sell the rips as they take advantage of a range-bound market."
The US government's Department of Energy will report its latest weekly snapshot of energy inventories on Wednesday.
Sentiment was boosted this week by China's decision on Monday to slash the so-called reserve requirement ratio for banks, stoking demand expectations in the world's largest energy consumer.
© 2016 AFP