Oil rose to a four-month high in London ahead of a meeting in Doha this month where producers will discuss freezing output.
Brent futures rose as much as 2.7 percent, erasing an 1.3 percent loss. Venezuela said the first priority of the April 17 talks should be to cap output, while Azerbaijan said it backs a freeze. Prices dropped earlier after Iraq, OPEC’s second-biggest producer, boosted output 2 percent and exports by 18 percent last month, the state-run Oil Marketing Co. said.
“There’s a lot of excitement about the Sunday meeting,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “Speculation that an agreement will be reached is generating some buying. There should be considerable short covering before the meeting.”
Oil has rebounded after falling to the lowest level in more than 12 years amid signs that a global glut will ease as U.S. output declines. Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, said it will agree to a freeze only if it’s joined by other suppliers including Iran, while Kuwait said a deal can be done without Tehran’s support.
Brent for June settlement advanced 79 cents, or 1.9 percent, to $42.73 a barrel on the London-based ICE Futures Europe exchange at 10:36 a.m. in New York. The contract earlier rose to $43.06, the highest since Dec. 7. Prices increased 8.5 percent last week.
West Texas Intermediate for May delivery rose 65 cents, or 1.6 percent, to $40.37 a barrel on the New York Mercantile Exchange. Futures touched $40.75, the highest since March 23. The contract rose 6.6 percent to $39.72 on Friday, the biggest increase since Feb. 12, to cap an 8 percent weekly gain. Total volume traded was 22 percent above the 100-day average.
U.S. crude production slid for the 10th time in 11 weeks through April 1, while stockpiles fell from the highest level in more than eight decades, according to the Energy Information Administration. The agency will report on last week’s inventories and output on Wednesday.
“Investors are anxious to see if the EIA reports we had another crude draw,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York.
Iraqi crude exports rose to 3.81 million barrels a day in March from 3.23 million the prior month, the company, known as Somo, said in an e-mailed statement. Iraq supports the February agreement between Saudi Arabia, Russia, Venezuela and Qatar to cap output at January levels, Iraqi Oil Ministry Spokesman Asim Jihad said on March 23, without confirming if the country agrees to freeze its own production.
“This is going to be a very volatile, headline-driven market this week,” Yawger said. “There will be many comments about the upcoming meeting and prices will move. If some sort of agreement looks likely come Sunday or Monday, we would get a rally at the start of next week.”
Kuwait Oil Co. will soon offer contracts for offshore rigs and support services to drill its first undersea wells as the country tries to boost output to the highest level in more than four decades, Chief Executive Officer Jamal Jaafar said Monday at a conference in Kuwait City. Short positions in WTI crude jumped 35 percent in the week ended April 5, according to the U.S. Commodity Futures Trading Commission. Bullish bets on Brent crude declined for a second week. TransCanada Corp. restarted the Keystone oil pipeline early Sunday, according to spokesman Mark Cooper.