Oil prices rise in Asia ahead of Doha meet

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SINGAPORE: Crude prices rose in Asia on Monday, extending last week’s gains from data showing a drop in US production, while traders look ahead to an upcoming meeting of oil majors they hope will lead to limits on output.

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Data showing US stockpiles and output had seen a surprise fall provided some much needed impetus to the market last week, with a fall in the number of rigs drilling also provided strong support.

Dealers are keenly awaiting the next stockpiles report due Wednesday hoping for a further fall, which would indicate a pick-up in demand.

But the key focus is on the April 17 meeting in Doha, where most of the world’s top producers led by Russia and Saudi Arabia will discuss a global glut that helped send prices plunge by three quarters between August 2014 and February this year.

At about 4:20 a.m. local time on Monday, US benchmark West Texas Intermediate for May delivery was up 13 cents, or 0.33 percent, at $39.85 and Brent crude for June was 15 cents, or 0.36 percent, higher at $42.09.

Both contracts rose 8 percent or more last week.

“This coming Wednesday is very critical as we will monitoring whether or not these falling [US] inventories are a one-time thing or a trend,” said Margaret Yang, an analyst with CMC Markets in Singapore.

“If inventory data falls, it will be a strong support for prices to rise,” she told Agence France-Presse.

However, while there is a growing expectation the Doha meeting will see signatories agree to a production freeze at January 2016 levels, analysts were skeptical of the long-term impact of such a deal.

Yang said that a production cut, not a freeze, would be more effective in boosting oil prices.

“Currently, production of those countries are at historical highs. Even though they can come up with a consensus to freeze the production at current levels, it doesn’t help,” she said.

“If they can come up with a conclusion to reduce production, that would be more meaningful.”

AFP

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