Oil extended gains above $31 a barrel as Iran supported a proposal by Saudi Arabia and Russia to freeze production at near-record levels, without saying whether it would curb its own output.
Futures climbed as much as 3.5 percent in New York after rising 5.6 percent Wednesday. Iran backs any measures to stabilize markets including the output cap, Oil Minister Bijan Namdar Zanganeh said after talks with Qatar, Iraq and Venezuela, according to a report from the Shana news service.
US crude stockpiles are forecast to have increased by 3.5 million barrels last week, according to a Bloomberg survey before government data Thursday.
Oil is still down 16 percent this year after the Organization of Petroleum Exporting Countries abandoned output targets in early December and as U.S. crude inventories swelled. Zanganeh didn’t mention if Iran, the second-biggest OPEC producer before sanctions were intensified in 2012, would deviate from plans to boost exports after the lifting of penalties last month.
“The market is re-evaluating the downside risks at the moment,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney, said by phone. “There is no expectation whatsoever that Iran will curb exports. Until we see the fundamentals improve, we’re not going to get a sustainable uplift in the price.”
West Texas Intermediate for March delivery rose as much as $1.06 to $31.72 a barrel on the New York Mercantile Exchange and was at $31.28 at 2:13 p.m. Hong Kong time. The contract advanced $1.62 to $30.66 on Wednesday. Total volume traded was about 13 percent above the 100-day average.
The S&P GSCI Crude Oil Index on Wednesday capped a 14 percent advance over three sessions, the most since August 2015, signaling prices may be near the bottom, Jodie Gunzberg, the global head of commodities at S&P Dow Jones Indices, said in a note. Energy companies led gains on the the MSCI Asia Pacific Index Thursday.
Brent for April settlement increased as much as 67 cents, or 1.9 percent, to $35.17 a barrel on the London-based ICE Futures Europe exchange. Prices added $2.32 to $34.50 on Wednesday. The European benchmark crude traded at a premium of $1.54 to WTI for April.
Implementation of the freeze remains unclear because Saudi Arabia and Russia said their commitment depends on other nations participating. Iran’s cooperation is crucial to the success of the plan to halt the fall in prices, according to Daniel Yergin, vice chairman of IHS Inc.
Goldman Sachs Group Inc. said the pact will have “little impact on the oil market as proposed, while there remains high uncertainty that it even materializes.”
Iran is seeking to boost output by 1 million barrels a day and regain market share. The nation should increase production by 500,000 barrels a day by March 20, the end of the Iranian calendar year, Shana reported on Wednesday, citing Roknoddin Javadi, managing director of National Iranian Oil Co. Iraq has already expanded output 70 percent in the past five years as investment flowed into its industry after years of conflict and neglect.
U.S. crude stockpiles have increased above 500 million barrels for the first time since November 1930, according to data compiled by the Energy Information Administration. Nationwide inventories declined by 3.26 million barrels last week, the industry-funded American Petroleum Institute was said to report Wednesday.