Iran Moving Ahead with Higher Production of Oil

In London, Brent North Sea crude for April delivery was also higher at $35.45 a barrel, up 35 cents.

Thomas did not say what price would spur EOG to boost output this year, but said it had a “premium inventory” of 3,200 well locations that can yield returns of 30 percent or more with oil at $40.

Analysts see USA crude futures averaging $38.90 a barrel in 2016, down $2.10 from the January poll forecast. The global crude-oil market is expected to remain oversupplied through the rest of the year.

Saudi Arabia led OPEC in a fierce battle against other producers for market share that helped push down oil prices.

Brent crude was trading at $35.24 per barrel, while West Texas Intermediate stood at $32.68 during Monday trading, recovering from January lows of $27.

A proposal to freeze output by Saudi Arabia and Russian Federation is achievable and prices may rise to as high as $50/bbl by the end of the year, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told CNBC.

Oil prices have fallen 70 percent since mid-2014 due to surplus crude piling up and a decision by the Organization of the Petroleum Exporting Countries in late 2014 to refrain from cutting output to shore up prices, as it had done for decades.

“We hope that they can get together to decrease their production”, he said. According to industry research group Baker Hughes, the number of rigs drilling for oil in the USA decreased by 13 last week to 400, the tenth straight weekly decline.

Brent crude’s front-month futures contract was up 90c at $36 a barrel by 4.13pm GMT, ahead of its expiry. As a result, the International Energy Agency (IEA) expects USA production to fall by 600,000 barrels per day (bpd) this year.

However, Morgan Stanley added that the agreement between the world’s two biggest oil producers wouldn’t deal with the 1-2 million barrels per day production overhang.

“The move came after Shell, Nigeria’s largest jointventure operator, said it planned to cut some 10,000 staff and contractor positions across its global operations”.

Crude futures rose in early trading on Monday after gaining over 15 per cent last week, with some indicators pointing to the possibility the market is showing signs of bottoming out. “A second hammer seems to be forming…in addition to the first hammer of last month”, said Reuters technical analyst Wang Tao, adding: “The downtrend… could be reversing”.

Dan Molinski and Miriam Malek contributed to this article.