Oil prices edge up on rising confidence that market has bottomed

U.S. West Texas Intermediate (WTI) crude futures were trading at $34.73 per barrel at 0229 GMT, up 7 cents from their last settlement.

WTI has gained over a third in value since Feb. 11, when prices dropped to little more than $26 per barrels, levels not seen since 2003.

International Brent futures were up 3 cents at 36.96 a barrel, and up almost a quarter since Feb. 11.

Traders said there was a spreading view that a market rout that has pulled down prices by 70 percent since mid-2014 had come to an end as production was stalling while demand remained strong.

"The price action in oil adds to the case that the bottom in the crude oil market could now be in place for 2016," ANZ bank said.

Reuters technical analyst Wang Tao said that U.S. crude prices ended a multi-year downtrend this week and that WTI prices would target prices above $40 per barrel in March.

The International Energy Agency (IEA) also said this weak that prices had likely bottomed out.

Prices have been driven by dipping output in the United States and rising signs of financial distress in the U.S. oil sector.

U.S. oil and gas companies, struggling with a steep fall in global crude prices, faced the worst-ever conditions to get cash to run their businesses, Moody's Investors Service said on Wednesday as its "Oil & Gas Liquidity Stress Index" surged to a record high of 27.2 percent in February.

U.S. crude production fell for a third month in December, down 43,000 barrels per day (bpd) to 9.26 million bpd.

Despite this, most analysts do not expect sharp price rises soon as production remains above demand and global crude inventories are brimming with unsold fuel.

Globally, analysts estimate that 1 million to 2 million barrels of crude are being produced every day in excess of demand, and an agreement by major producers, led by Russia and Saudi Arabia, to freeze output at January levels will do little to reduce the glut.

Russia in February pumped oil at the same rate in January of 10.88 million barrels per day (bpd), an almost 30-year high, Energy Ministry data showed on Wednesday.

Output from Saudi Arabia, the Organization of the Petroleum Exporting Countries' (OPEC) biggest exporter, is also above 10 million bpd.

U.S. crude inventories rose 2 percent last week, or 10.4 million barrels, to a fresh record of 517.98 million barrels last week.

 

(Reuters)