Oil extended a rally above $35 a barrel on Thursday, adding to the previous session’s 7 percent jump, as support from a weaker dollar offset concern about ample supply and record-high US inventories.
Crude rebounded from an earlier decline after an Iranian official was quoted as saying Tehran supported a meeting between OPEC and other oil producers — raising hopes they could take action to support prices despite widespread skepticism in the market.
The dollar weakened further on speculation the US Federal Reserve might not raise interest rates this year. A falling dollar tends to support oil and other dollar-denominated commodities.
“Headlines continue to fly about an OPEC/non-OPEC meeting. We are currently in an environment of elevated rumors,” said Olivier Jakob, oil analyst at Petromatrix.
“Without a fresh development Brent might face some difficulty to fly above $40.”
Brent crude was up 47 cents at $35.51 a barrel at 1442 GMT. Prices have gained more than 30 percent since falling to $27.10, the lowest since November 2003, on Jan. 20. US crude was up $1.00 to $33.28.
Venezuelan Oil Minister Eulogio del Pino, on a tour to lobby producers for steps to boost prices, said on Thursday he had a “good and productive” meeting with his counterpart from Qatar, holder of the OPEC presidency in 2016, without giving more details.
Del Pino is scheduled to meet Saudi Petroleum and Mineral Resources Minister Ali Al-Naimi in Riyadh on Sunday.
On Wednesday, Iranian news agency Shana had quoted Del Pino as saying that six producing countries, including OPEC members Iran and Iraq and non-members Russia and Oman, supported a producer meeting.
So far, none of OPEC’s Gulf members, including top exporter Saudi Arabia, has publicly backed a meeting.
But the effort remains potentially bullish, some analysts said.
“The parties are inching toward a coordinated production cut but there is still a long way to go,” Tamas Varga of broker PVM said.
Gulf members were behind OPEC’s 2014 shift in strategy not to cut production and instead let lower prices curb more costly-to-develop supply sources.
A rise in OPEC output since then has swelled supply and contributed to the price decline.
Underlining ample supply, US crude inventories climbed by 7.8 million barrels last week to a record 502.7 million barrels, a government report showed.
Oil analysts remain largely bearish in their outlook.
Morgan Stanley on Thursday lowered its average 2016 Brent price forecast to $30 from $49 previously.