Singapore: Oil prices jumped in early trading on Wednesday, supported by growing expectations that exporters will agree to freeze their output amid global oversupply, although Iran`s plans to boost production are seen as capping bigger gains.
The Kuwaiti governor for the Organization of the Petroleum Exporting Countries (OPEC), Nawal Al-Fuzaia, said on Tuesday that there were "positive indications an agreement will be reached" during a producer meeting scheduled for April 17 in Qatar.
Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $36.75 per barrel at 0137 GMT, up 2.4 percent, or 86 cents, from their last settlement.
International Brent futures rose 1.5 percent at $38.44 a barrel.
"Oil gained some momentum. The comment by the Kuwait OPEC governor provided some support to prices," ANZ bank said on Wednesday, but warned that investors would likely remain cautious ahead of the April 17 meeting.
A preliminary producer agenda, seen by Reuters, that has been sent to invited nations by the meeting`s host Qatar indicated expectations for a short gathering lasting 4 hours, including just 30 minutes slated for a debate on approving the deal.
An initial output freeze agreed in February has helped oil prices rise to almost $38 a barrel from a 12-year low close to $27 in January.
Still, prices have fallen in recent days on doubts that a wider deal will be reached, largely because Iran has so far said it has no intention of slowing its production after crippling sanctions against it were lifted in January.
Iranian Oil Minister Bijan Namdar Zanganeh said the country`s crude output would reach four million barrels per day (bpd) by March 2017, state television reported on Wednesday, with plans to export 2.25 million bpd of those supplies.
That would be up from a little over 1 million bpd under the sanctions and only slightly below pre-sanctions peaks of 2.5 million bpd.
With Iran`s exports rising and other producers pledging to freeze production near record levels, a Doha agreement would do little to address a global supply overhang that sees at least a million barrels of crude produced every day in excess of demand.
Dutch bank ING said that technical market indicators implied that oil prices had developed a bottom near recent lows but that the "short-term upside is limited".