Oil prices extend gains on dollar-slide, talk of oil producer meeting

Crude oil futures extended gains from the previous session on Thursday, as a weaker dollar and unconfirmed talk of producers potentially meeting to discuss output cuts lifted the market despite record US stocks.

Oil is traded in dollars and a softening of the U.S. currency makes crude cheaper for holders of other units, increasing demand for the commodity.

Underlining ample supply, U.S. crude inventories climbed by 7.8 million barrels last week to a record 502.7 million barrels, a government report showed.

The bullish part of data is that US crude production lost 7,000 to 9.214 million barrels a day last week, according to the EIA report.

Iran’s oil minister said on Thursday that the Islamic republic supports efforts by OPEC member Venezuela to stabilise global crude markets, after discussions in Tehran.

At around 0300 GMT, US benchmark West Texas Intermediate for delivery in March was up 36 cents, or 1.12 percent, to $32.64 and Brent crude for April was trading higher by 29 cents, or 0.83 percent, at $35.33. So far, none of OPEC’s Gulf members, including top exporter Saudi Arabia, has publicly backed a producer meeting.

Earlier, Nymex oil futures had dipped in response to a steep advance in American crude inventories – their fourth weekly increase in a row.

Since mid-2014, oil prices have fallen around 70%.

“If this were to happen, the oil market would tighten and prices may well stage a more significant recovery”, he said. Then prices retraced their gains when officials from OPEC dismissed the stories as just rumors. “And if there is a meeting, whether it’s going to even accomplish anything”, said Dominick Chirichella, a senior partner at Energy Management Institute. “I do think we’re close to the bottom and the bottom in prices will be this quarter”.

“Non-OPEC marginal barrel production in the next six months will be sensitive to sustained low oil prices, whereby its break-even point would not be able to tolerate the price conditions at that time”, it said. Meaningful production cuts are unlikely to occur with the reluctance of OPEC to curb production levels, and until OPEC decides to reduce these levels, oil will continue to be on the decline.

“Approximately these parameters were voiced – to cut the production for each country by five percent”, Novak told reporters responding to a question about whether Saudi Arabia offered Russian Federation to cut production by five percent.