Oil extended gains for a second day after Kuwait said a deal to freeze output can be reached without Iran and U.S. industry data showed crude stockpiles declined.
Futures rose as much as 2.9 percent in New York after climbing 0.5 percent Tuesday. Brent in London also gained. Major producers have no option but to reach an agreement to cap production when they meet April 17 and a freeze may set a price floor, said Nawal al-Fezaia, Kuwait’s governor to the Organization of Petroleum Exporting Countries. U.S. crude inventories dropped by 4.3 million barrels last week, the American Petroleum Institute was said to report.
“Oil is going to be very volatile in the lead up to the meeting,” Angus Nicholson, an analyst at IG Ltd. in Melbourne, said by phone. “It’s so uncertain as to whether a deal is going to be reached. The API numbers are probably more bullish for the market.”
Oil has swung between gains and losses since Friday amid speculation about whether an agreement can be reached at the meeting in Doha. Saudi Arabia will only cap production if it’s joined by other major producers including Iran, which is pumping crude at the fastest pace in almost four years, the kingdom’s deputy crown prince said last week.
West Texas Intermediate for May delivery increased as much as $1.03 to $36.92 a barrel on the New York Mercantile Exchange and was at $36.81 at 1:28 p.m. Singapore time. The contract rose 19 cents to $35.89 on Tuesday after falling 6.9 percent the previous two sessions. Total volume traded was 86 percent above the 100-day average.
U.S. Stockpiles
Brent for June settlement climbed as much as 77 cents, or 2 percent, to $38.64 a barrel on the London-based ICE Futures Europe exchange. The contract added 18 cents to $37.87 on Tuesday. The global benchmark was at a 64 cent premium to WTI for June.
Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, increased by 620,000 barrels last week, the API reported, according to two people familiar with the figures. Nationwide crude inventories probably rose by 2.85 million barrels, according to a Bloomberg survey before an Energy Information Administration report Wednesday.
Output freeze and oil-market news:
Rising Iranian production won’t hinder a freeze agreement as the country will find it difficult to sell its crude in an oversupplied market, Kuwait’s al-Fezaia said in an interview on Tuesday. Vitol Group BV earned $1.6 billion last year, the most since 2011, as the world’s largest independent oil trader profited from price swings in the energy market, according to a person familiar with the matter.
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