Singapore | Oil prices rebounded in Asia Friday but doubts over a planned meeting between producer giants including Russia and Saudi Arabia this month to discuss an output freeze held back gains.
Questions over the proposed March 20 meeting emerged after Iran declined to agree to any output cap as it ramps up production following the lifting of nuclear-linked sanctions in January. And even if a meeting does takes place, analysts are not optimistic an agreement would be reached. The idea of freezing output surfaced in discussions led by OPEC kingpin Saudi Arabia and Russia in February after an increase in global production January added to a supply glut that has sent prices plunging by 70 from mid-2014 peaks.
At around 0820 IST, US benchmark West Texas Intermediate (WTI) for delivery in April was up 43 cents (1.14 per cent) at USD 38.27 and Brent crude for May added 44 cents (1.10 per cent) to USD 40.49. Both contracts closed lower yesterday after surging sharply on Wednesday on the back of a US Department of Energy report showing robust demand for gasoline in the world’s top oil consumer. WTI rose to its highest level in more than three months and Brent breached the USD 41 mark Wednesday.
The main focus for the oil market now is whether the OPEC and non-OPEC nations will come together, said Bernard Aw, market strategist at IG Markets in Singapore. Even if there is a short-term rebound in prices, the fundamentals remain unchanged. There is still too much supply so even if they decide on a freeze, production levels are still high, he told AFP. If things turn out to be bad at the meeting, prices could go back to USD 30 and below. Oil market sentiment has also been weighed down by a report showing a plunge in Chinese exports in February, stoking fresh fears of a sharp slowdown in the economy, a key engine for global growth.