LONDON: Oil rallied Tuesday on a report that Saudi Arabia and Russia, the world’s two biggest producers, have reached a crude output freeze agreement ahead of key Doha talks this weekend.
At about 1700 GMT, US benchmark West Texas Intermediate for delivery in May gained $1.41 at $41.77 per barrel, having earlier touched a three-week high at $41.94.
Brent crude for June delivery was trading $1.55 higher at $44.38 a barrel. The contract had earlier forged a four-month peak at $44.73.
Moscow and Riyadh have reached a “consensus” over freeze oil production, the Interfax news agency reported Tuesday, citing an “informed diplomatic source in Doha”.
“Today there was a contact between representatives of Saudi Arabia and Russia, during which the countries reached a consensus on the question of freezing oil production,” the source told Interfax.
This Sunday’s meeting in the Qatari capital Doha will bring together both Opec producers led by Saudi Arabia and non-Opec members such as Russia.
A major topic at the gathering will be a proposal to freeze output at January levels in an attempt to ease stubborn global oversupply.
“The price of oil added to early gains on unconfirmed rumours that Russia and Saudi Arabia have reached an agreement to freeze production,” added CMC Markets analyst Jasper Lawler on Tuesday.
“The agreement has theoretically been in place since February 16. It’s the details of quotas and the involvement of other countries notably Iran that is yet to be resolved.”
Lawler added that oil won further support from the weaker greenback, which makes dollar-priced crude cheaper for buyers using stronger currencies. That tends to stimulate demand and boost prices.
Courtesy : Dawn News