Oil staging one of its best rallies of the year as ministers from major producers agree on steps that could potentially pull the market away from the supply side. File photo by Monika Graff/UPI | License Photo
NEW YORK, Feb. 18 (UPI) -- An Iran decision to back a multilateral oil production freeze helped support a rally in crude oil prices Thursday, though analysis finds supply strains persist.
Iran is playing host to ministers from major oil-producing nations. Russia and Saudi Arabia joined other regional delegates in Qatar this week to voice support from a move to freeze crude oil production at January levels in an effort to stimulate crude oil prices.
Iranian Oil Minister Bijan Zangeneh said that, even as Iran aims to reclaim its market share as sanctions pressures ease, something needs to be done to correct the market. He said those gathered in Tehran this week viewed the freeze as a logical step.
"This is the initial step and we have to look at it positively," he said. "But I think everybody agrees that we have to monitor the market situation and ... to consult on the next steps if necessary."
Crude oil prices initially slumped in response to the production freeze this week after those gathered in Doha said the proposal hinged on widespread cooperation.
Brent crude oil prices shot up in early Thursday trading, gaining 3 percent from the previous day to open in New York at $35.51 per barrel. West Texas Intermediate, the U.S. benchmark for crude oil prices, moved up 3.3 percent to start the day at $31.70 per barrel.
Thursday's rally was supported in part from positive data from the United States and European Central Bank. The U.S. Labor Department said first-time claims for unemployment fell 7,000 for the week ending Feb. 13 to 262,000. The less-volatile four-week average moved lower by 8,000 to 273,250.
In Europe, the central bank said it posted a profit for 2015 of $972 million, against $887 million for the previous year.
Analysts monitoring the January production freeze said markets still heavily favor the supply side. The latest report from Standard & Poor's said the agreement between Qatar, Russia, Saudi Arabia and Venezuela is not expected "to have a material impact on our oil price assumptions."