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Brent Oil passed the $35 per barrel mark this morning on U.S. inventory news and as speculators appeared to positively interpret yesterday’s news that Iran “supports” the idea of an output freeze at January levels put forward by Saudi Arabia, Russia and Venezuela.
Brent crude rose 2.6 percent to $35.39 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, WTI futures were trading up 3.2 percent at $31.64 a barrel.
Oil is likely to remain highly volatile as major producers continue to issue ambiguous statements. The 7 percent gain is being viewed as a market overreaction to headlines yesterday that Iran supported the January-level output freeze, but has not committed to an output cap itself and is unlikely to as it seeks to increase its own production by 500,000—fresh off sanctions.
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Iranian Oil Minister Bijan Zangeneh noted, "The was decision taken so that OPEC members and non-OPEC countries freeze their production ceiling in a bid to stabilize the market and improve prices in the interest of consumer and producer is also supported by us."
Also contributing to the gains this morning were rumors of a drop in U.S. inventories. The American Petroleum Institute reportedly said that US crude supplies fell by 3.26 million barrels last week, but Bloomberg predicts that the US Energy Information Administration (EIA)—which will release inventory data later today—will show a stockpile increase of 3.5 million barrels.
Related: Why OPEC Production Freeze Could Pave The Way For Actual Cuts
A Tuesday Reuters poll showed analysts projecting US crude inventories to climb by 3.9 million barrels for the week to 12 February.
A survey of 10 analysts surveyed from The Wall Street Journal produced an average forecast for a 3.1 million barrel rise in oil inventories.
By James Burgess of Oilprice.com
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James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…