Oil prices rebound as producers agree to April meeting

Oil prices slumped on Tuesday after OPEC kingpin Saudi Arabia's oil minister reaffirmed opposition to a production cut to address global oversupply, expressing hope only for an output freeze next month. (AFP/Haidar Mohammed Ali)

NEW YORK: Oil prices rebounded on Wednesday (Mar 16) as news of an April meeting of producers to limit petroleum output overshadowed a build in US oil inventories.

US benchmark West Texas Intermediate for April delivery gained US$2.12 (5.8 per cent) at US$38.46 a barrel on the New York Mercantile Exchange. Brent North Sea oil for May delivery rose US$1.59 (4.1 per cent) to US$40.33 a barrel in London.

Qatar's energy minister, Mohammed al-Sada, said key producers from within and outside the OPEC cartel will meet on Apr 17 in Doha in an effort to stabilise the oil market.

The initiative is backed by 15 countries accounting for some 73 per cent of global oil output, said the oil minister, who also serves as president of the Organisation of the Petroleum Exporting Countries.

Russian Energy Minister Alexander Novak, who supports the initiative, said producers could draft a common declaration ahead of the gathering of "countries' intention to freeze their oil production at a level not higher than that of January."

Novak said on Wednesday that Iran had indicated that it is "ready to participate" in the meeting.

US commercial petroleum stocks rose 1.3 million barrels to 523.2 million barrels in the week ending Mar 11, a record high, according to US Department of Energy data.

Andy Lipow, head of Houston energy consultancy Lipow Oil Associates, said the market gave more weight to the Qatar announcement than to news that US oil inventories remain lofty.

"The market is actually reacting to the fact that OPEC and non-OPEC producers are going to have a meeting to discuss a production freeze in April," Lipow said.

The meeting "is probably the first step in many for producers to decide whether they're going to cut production later on in the year and how to accommodate Iran's return on the oil market," he said.