Oil extends gain as Iran backs Saudi-Russian output freeze without committing to curbs itself

A motorist fills his car with gas at a gas station near an oil field pumping rig.
A motorist fills his car with gas at a gas station near an oil field pumping rig. PHOTO: AFP

HONG KONG (BLOOMBERG) - Oil extended gains above US$31 a barrel on Thursday (Feb 18) 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 per cent in New York after rising 5.6 per cent on Wednesday.

Iran backs any measures to stabilise 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 on Thursday.

Oil is still down 15 per cent this year after the Organisation of Petroleum Exporting Countries effectively abandoned output targets in early December and as US crude inventories swelled to the highest level since 1930.

Mr Zanganeh did not mention if Iran, the second-biggest Opec producer before sanctions were intensified in 2012, would deviate from plans to restore exports after the lifting of penalties last month.

West Texas Intermediate for March delivery rose as much as US$1.06 to US$31.72 a barrel on the New York Mercantile Exchange and was at US$31.50 at 7.33am Hong Kong time. The contract advanced US$1.62 to US$30.66 on Wednesday. Total volume traded was about 59 per cent below the 100-day average.

Brent for April settlement increased US$2.32, or 7.2 per cent, to US$34.50 a barrel on the London-based ICE Futures Europe exchange on Wednesday.