Crude oil gains on likely Saudi-Iran deal on production cutbacks

Crude oil pared part of Tuesday's heavy losses and pushed higher on Wednesday after reports said Iran was open to cooperation with Saudi Arabia, giving some respite to a market concerns over falling demand.

Oil's gains were supported by comments from Iran's oil minister that Tehran is ready to negotiate with Saudi Arabia over the current conditions in global oil markets.

Opec member Venezuela had asked Russia, one of only three countries producing more than 10 million barrels a day, alongside the US and Saudi Arabia, to join discussions about possible co-ordinated output cuts.

Brent futures for near month was up 70 cents, or 2.3 per cent, at $31.02 a barrel by 04:37 GMT. The contract had fallen for a fourth straight session on Tuesday to close $2.56, or 7.8 per cent, lower.

Benchmark US sweet light crude for March delivery was 59 cents higher at $28.53 a barrel, after falling 5.9 per cent on Tuesday to $1.75.

The international crude oil price of the Indian basket of crude oil stood at $31.06 per barrel as of Tuesday (9 February), figures released by the Petroleum Planning and Analysis Cell (PPAC) of the ministry of petroleum and natural gas showed.

The price spike defied a holiday mood in Asian markets with China closed all week for the Lunar New Year holiday, with South Korea off on Wednesday and Japan taking a public holiday on Thursday.

The International Energy Agency (IEA), which advises western countries on the oil market, meanwhile, said the Organisation of Petroleum Exporting Countries (Opec) is unlikely to cut a deal with other producers to reduce ballooning output.

It expects the world to store unwanted oil for most of 2016 as declines in US oil output takes time.

The US Energy Information Administration (EIA) also this week cut its 2016 world oil demand growth forecast by 180,000 bpd, with demand to hit 95.02 million bpd, up 1.24 million bpd from 2015.

The American Petroleum Institute (API), an industry group, reported a build-up of 2.4 million barrels in US crude stockpiles for last week.