Image: A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the West Siberian city of Kogalym, Russia, January 25, 2016. REUTERS/Sergei Karpukhin
By Keith Wallis
SINGAPORE (Reuters) – U.S. crude futures rose as much as 3 percent in early Asian trade on Thursday after Iran backed plans by Russia and Saudi Arabia to cap crude oil production at January levels, extending steep gains in the previous session.
U.S. crude jumped $1.06 shortly after Asian markets opened, and was trading up 77 cents at $31.43 a barrel as of 6.46 p.m. ET, up 2.5 percent. The U.S. benchmark surged 5.6 percent in the previous session to close at $30.66 a barrel.
“The price rebound looks like an overreaction as the probability of Iran not increasing production is still low in our view,” ANZ said in a note on Thursday.
“Iran has just started boosting production after sanctions were lifted and is unlikely to commit to maintaining output at current low levels,” the note added.
Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar in Tehran on Wednesday but did not say if Iran would cap output at January’s levels in keeping with moves by major producers Russia, Saudi Arabia and Iraq to limit production.
Iran’s OPEC envoy Mehdi Asali said it was “illogical” to ask Iran to freeze production levels in comments to the Shargh daily newspaper before the talks on Wednesday.
Iran exported around 2.5 million barrels per day (bpd) of crude before 2012, but sanctions, imposed by world powers to curb Tehran’s nuclear program, cut production to about 1.1 million bpd.
The sanctions were lifted last month, allowing Iran to resume selling oil freely in international markets.
Oil prices also gained support after U.S. crude stocks unexpectedly fell by 3.3 million barrels last week to 499.1 million, data from industry group the American Petroleum Institute showed on Wednesday.
Analysts had expected crude inventories to climb by 3.9 million barrels to 505.9 million barrels in the week to Feb. 12, according to a Reuters poll on Tuesday.
(Reporting by Keith Wallis; Editing by Richard Pullin)
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