Source : Investing.com
Oil prices turned higher in North America trade on
Tuesday, after falling below the $30-level overnight, as traders covered
short positions amid speculation OPEC and non-OPEC producers may be
edging closer to a deal to cut production in an effort to stem the
persistent slump in oil prices.
The Organization of the Petroleum Exporting Countries is making
renewed calls for rival producers to cut supply alongside its members,
but Russia, seen as key to any deal, has so far refused to cooperate.
Iraq's oil minister said on Tuesday he saw some flexibility for a deal between OPEC and non-OPEC.
Crude oil
for delivery in March on the New York Mercantile Exchange rose 31
cents, or 1.01%, to $30.65 a barrel by 13:45GMT, or 8:45AM ET. Prices
traded in a wide range between $29.26 and $30.84. A day earlier, Nymex
futures dropped $1.85, or 5.75%.
Market players looked ahead to fresh weekly information on U.S.
stockpiles of crude and refined products to gauge the strength of demand
in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles rose by 3.5 million barrels in the week ended January 22.
U.S. oil futures plunged below $27 last week for the first time since
September 2003, as investors worried that a huge oversupply in crude
was coinciding with an economic slowdown, especially in China.
The U.S. benchmark is down nearly 21% this month amid ongoing concerns over a global supply glut.
Elsewhere, on the ICE Futures Exchange in London, Brent oil
for March delivery tacked on 24 cents, or 0.79%, to $30.74 a barrel,
while the April contract advanced 37 cents, or 1.17%, to $31.68. Brent
sank to $27.10 on January 20, a level not seen since October 2003.
Brent prices are down almost 20% since the start of the year as
lingering concerns over China’s economic outlook added to the view that a
global supply glut may stick around for much longer than anticipated.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Global crude production is outpacing demand following a boom in U.S.
shale oil and after a decision by the Organization of the Petroleum
Exporting Countries last year not to cut production in order to defend
market share.
Oversupply issue will be exacerbated further as Iran plans to return
to the global oil market after western-imposed sanctions were lifted
earlier this month. Analysts say the country could quickly ramp up
exports by around 500,000 barrels.
The surge in Iranian shipments is viewed as bearish for crude, which
has fallen approximately 75% from its peak of $115 two summers ago, amid
a glut of oversupply on markets worldwide.
Most market analysts expect a global glut to worsen in the coming
months due to soaring production in North America, Saudi Arabia and
Russia.
Meanwhile, Brent's premium to the West Texas Intermediate crude
contract stood at 9 cents, compared to a premium of 16 cents by close of
trade Monday.
