SINGAPORE: Oil prices resumed their rise in Asian trade on Thursday despite an increase in US inventories, with traders hoping talks among major producers could lead to an output cap.
According to US Energy Information Administration (EIA) data, oil production fell to just over nine million barrels a day in the week to February 26 although inventories rose an expected 10.4 million.
At about 6 a.m. local time, US benchmark West Texas Intermediate for April delivery was up 13 cents at $34.79 a barrel while Brent for May was seven cents up at $37.00 a barrel.
Phillip Futures investment analyst Daniel Ang told Agence France-Presse that the fall in US production provided a degree of “bullishness” in the market.
“Judging from this decrease, we could easily be seeing more drops and by the end of the year even a 500,000-barrel-per-day drop.”
Plans by major oil producers including Russia as well as OPEC members led by Saudi Arabia to cap output have also provided some support for prices in the past two weeks.
Crude, which in January was wallowing near 13-year lows below $30 a barrel—hit by overproduction and a supply glut—has steadily picked up recently as dealers are buoyed by the fact there are talks.
But analysts doubt it will have much effect in the near term on crude prices, which are about 70 percent off their mid-2014 highs.
“On the balance of probability, it’s going to be very hard for OPEC to do much more than, say, freeze production at current levels or agree to that, which won’t have much impact on the current market,” CMC Markets chief market analyst Ric Spooner told Agence France-Presse.