Oil bounces as Iran signals support for OPEC freeze action
Oil prices rose more than 1 percent on Tuesday, reversing early losses, after Reuters reported Iran was sending positive signals that it may support joint OPEC action to prop up the market.
Iran, the third-largest oil producer in the Organization of the Petroleum Exporting Countries, has been boosting output since the lifting of Western sanctions in January.
Although it has not said if it will join an effort to curb production at a meeting of OPEC and other producers in September, Tehran appears to be more willing to reach an understanding on the matter, sources in OPEC and the oil industry told Reuters.
Brent crude was up 80 cents, or 1.7 percent, at $49.96 a barrel by 1:48 p.m. EDT. It had fallen 1.4 percent earlier.
U.S. West Texas Intermediate (WTI) crude rose 67 cents, or 1.4 percent, to $48.08, after reaching a session low of $46.59.
“Iran is reaching its pre-sanctions production level soon and after that it can cooperate with the others,” said a source familiar with Iranian thinking after a visit by Venezuelan Oil Minister Eulogio Del Pino to Tehran.
A two-year long selloff in oil has severely hurt the economies of Venezuela, Iraq and Nigeria and they are more anxious to boost crude prices than OPEC producers such as Saudi Arabia and Iran, that are more keen in protecting market share. Despite rebounding this year, oil still trades at less than half of mid-2014 levels of above $100.
Del Pino last week toured oil-producing countries to convince OPEC for a production freeze after a similar plan failed in April.
Many analysts remain skeptical of the effort.
“The current price level of well over $40 does not provide non-OPEC producers with any kind of motivation to support oil prices by cutting or maintaining current production levels,” said Tamas Varga, analyst at London-based energy broker PVM.
Prime Minister Haider al-Abadi said Iraq had not reached its full oil exports potential as his government urged foreign oil firms in the country to raise output.
The Iraqi call comes on top of worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count.
Goldman Sachs forecast $45-$50 for a barrel of oil through summer 2017, maintaining its view of weak fundamentals in the near term.
The market was awaiting U.S. oil stockpile data, due from trade group American Petroleum Institute (API) at 4:30 p.m. EDT and official government data on Wednesday. Analysts polled by Reuters forecast crude stocks fell 500,000 barrels last week.
(Additional reporting by Alex Lawler in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Jonathan Oatis)