NEW YORK Oil prices steadied on Tuesday after Kuwait said an output freeze by major oil producers would proceed without Iran, shoring up sentiment ahead of weekly data likely to show another record high in U.S. crude inventories.
A meeting of oil-producing countries in Doha on April 17 will deliver an agreement to freeze output, Kuwait's OPEC governor and two sources said.
Iran's Deputy Oil Minister Marzieh Shahdaei had said earlier Tehran will opt out of the plan to raise crude exports to pre-sanction levels. Iran is the second largest exporter in the Organization of the Petroleum Exporting Countries and fourth largest oil producer in the world.
Last week, a Saudi prince was reported saying the kingdom will not participate in the production without Iran's involvement.
Brent crude LCOc1 was up 10 cents at $37.79 a barrel by 11:52 a.m. EDT (1552 GMT), after hitting a one-month low at $37.27.
U.S. crude was up 12 cents at $35.82 a barrel. It earlier sunk to $35.24, its lowest since March 4, amid worries preliminary data from the American Petroleum Institute at 4:30 p.m. (2030 GMT) will show U.S. crude stockpiles at an eighth straight week of record highs. [EIA/S]
Crude oil prices remain nearly 40 percent above 12-year lows struck in mid-February, although their recovery has fizzled since last week on skepticism over the output freeze plan.
Kuwait "seems to think that a production freeze deal is possible even without Iran," said Tim Evans, energy futures specialist at Citi Futures. "While that's technically true, we also think it would be ineffective in bending the path of future production, leaving the expected global surplus in place."
U.S. crude was weighed down earlier in the session by government data on Monday showing the first monthly drop in U.S. gasoline demand in 14 months. Gasoline demand has been one of the strongest pillars of U.S. crude for months now.
But on closer inspection there is nothing surprising about the monthly reading for January, which is in line with the low weekly consumption numbers reported during that month, Reuters market analyst John Kemp said.
U.S. gasoline demand is still strong despite poor weather in January. It only began to ramp up from the middle of February and has remained strong since then according to the weekly data. (tmsnrt.rs/1RBCJ3c)
(Additional reporting by Karolin Schaps in LONDON; Editing by Marguerita Choy)
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Updated Date: Apr 06, 2016 00:15 AM