Brent crude futures rose 2 percent on Monday, adding to strong gains last week, on increasing hopes that the market has bottomed out and as OPEC kingpin Saudi Arabia said it would work with other producers to limit oil market volatility.
Brent futures were trading at $35.77 a barrel at 1443 GMT, up 67 cents from their previous close. US crude futures were up 42 cents at $33.20.
Since Feb. 11, the last time Brent was below $30, the benchmark price has risen by 17 percent, though prices are still a fraction of the $115 of 20 months ago.
“The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action,” the Saudi cabinet said in a statement.
Saudi Arabia and several fellow OPEC members agreed with non-OPEC Russia this month to freeze output at January levels in an attempt to prop up prices.
Russian President Vladimir Putin called a meeting with top managers of his country’s leading oil producers on Tuesday.
However, Iran remains the main obstacle to a global output freeze because it is determined to ramp up supply after the country’s emergence from international economic sanctions in January.
On Monday Iran said it had increased exports steeply over the past month. Exports climbed as high as 1.75 million barrels per day, adding to an already oversupplied market.
“There is still a lot of downside risk ... but the US crude market seems to have passed the worst point and crude runs should start creeping higher, taking pressure off inventory levels,” said Richard Gorry, director of JBC Energy Asia.
US producers cut the number of rigs drilling for oil for a tenth week running, taking the rig count to its lowest since December 2009.
A Reuters monthly poll showed on Monday that oil prices are expected to average a little more than $40 a barrel this year.
Financial data also suggested sentiment might be shifting.
Data from InterContinental Exchange on Monday showed that investors in crude held more futures and options contracts betting on rising prices than at any time since the records began in 2011.
The amount of open positions in US crude contracts betting on a further fall in prices has dropped to about 17 percent since mid-February.
At the same time, financial traders have raised their bullish bets on oil after talk of a global production freeze, signs of falling US shale crude output and growing gasoline demand.
“There are tentative signs the worst may be over for commodities, at least judging by the pick-up in investor sentiment,” Barclays said.
Source: Arab News