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UPDATE 9-Oil up 7 pct, extending rebound, as Iran welcomes output freeze

Published 18/02/2016, 04:05 am
© Reuters.  UPDATE 9-Oil up 7 pct, extending rebound, as Iran welcomes output freeze
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* Iranian oil minister meets with counterparts

* Tehran did not confirm it would freeze production

* Freeze will do little to boost prices -analyst (New throughout, updating market activity and comments to U.S. session; adds byline and NEW YORK to dateline)

By Barani Krishnan and Ron Bousso

NEW YORK/LONDON, Feb 17 (Reuters) - Global oil prices rose as much 7 percent on Wednesday, rebounding further from their lowest levels in a dozen years, after Iran voiced support for a Russia-Saudi-led move to freeze production in an oversupplied market.

Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar in Tehran for over two hours on Wednesday, saying the proposed production "ceiling" should be the first step toward stabilizing the market. quoted by Tehran's Shana news agency, did not explicitly say that Iran would keep its own output at January's levels.

But his tacit endorsement for what would be the first OPEC-non OPEC price support pact in 15 years spurred oil traders into pushing global benchmark Brent up more than $2 a barrel.

"I'm pricing between $35 and $45 for Brent by summer, as we still have a daily surplus of up to 1.7 million barrels of oil to contend with," said Phil Davis, an independent crude trader at PSW Investments.

"But I don't see the panic move down below $30 happening again," Davis said. "That's just untenable."

Brent LCOc1 was up $2.32, or 7.3 percent, at $34.50 a barrel by 11:45 a.m. EST (1645 GMT).

U.S. crude CLc1 rose by $1.90, or 6.4 percent, to $30.94 a barrel.

Crude prices have fallen from highs above $100 a barrel with little resistance for most of the past 20 months, thanks to near-record output by the Organization of the Petroleum Exporting Countries and other major drillers such as Russia. But after falling to 2003 lows beneath $30 last week, crude has been rising, surging 12 percent on Friday alone after the United Arab Emirates said OPEC was ready to cooperate on an output cut.

Under the proposal to freeze production, major producers including Russia and Saudi Arabia would restrict output at January levels.

An Iranian official earlier said the fourth largest producer in OPEC would continue increasing its output until it reached levels achieved before the 2012 trade sanctions. pact to freeze output will make little difference to this year's overall supply-demand balance in oil.

"The market needs a cut, not a production freeze," PVM analyst David Hufton said.

Investors are also eyeing U.S. oil inventory data due on Wednesday and Thursday for further price direction. A Reuters poll of analysts showed U.S. crude stockpiles likely rose 3.9 million barrels last week.

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