Investing.com -- U.S crude futures surged more than 6% before paring some gains late on Wednesday, as officials from Iran backed a measure from four major producers aimed at stabilizing the oil market, without specifying whether it will immediately freeze its own production levels.
On the New York Mercantile Exchange, WTI crude for March delivery wavered between $28.74 and $31.12 a barrel before settling at $30.62, up 1.58 or 5.42% on the day. Volatility remained high, as U.S. crude futures closed by more than 4% from its prior day's settlement level for the fifth consecutive session. WTI crude, which has closed lower in 10 of the last 14 sessions, continues to linger near 13-year lows from last week when it traded at $26.05 a barrel.
On the Intercontinental Exchange, brent crude for April delivery traded in a broad range between $31.82 and $34.83 a barrel, before closing at $34.52, up 2.35 or 7.28% on the session. With Tuesday's surge, North Sea brent futures turned positive for the month. After sliding 5.3% over the first month of the year, brent has climbed more than 1% since the start of February.
In Tehran, Iran oil minister Bijan Zanganeh described talks with Eulogio Del Pino and Adel Abdel Mahdi, his counterparts from Venezuela and Iraq, as mostly positive after several hours of meetings on Wednesday. The discussions came one day after a group of four nations – Saudi Arabia, Russia, Venezuela and Qatar – agreed in principle on an accord in Qatar that would freeze their production at levels reached in January. While Zanganeh told reporters after the meeting that Iran supports the Doha proposal on an output freeze from the four nations, he stopped short of capping Iranian production from its total from last month.
"We look forward to the beginning of cooperation between OPEC and non-OPEC countries and we support any measure that can stabilize the market and increase prices," Zanganeh said, according to Iran's Shana News Agency.
On Monday, three Iranian tankers carrying 2 million barrels to French Oil and Gas company Total, and another 2 million to companies in Spain and Russia, departed for Europe, Shana reported. After long-term economic sanctions were eased against Iran last month, the Persian Gulf nation is planning to ramp up its production and exports by at least 1 million barrels per day in 2016. Iran is hesitant to freeze its production until its output returns to pre-sanction levels.
In January, Saudi Arabia pumped approximately 10.2 million bpd, while Russia produced a post-Soviet high of 10.9 million bpd. Saudi production remains near its record high from last June of 10.5 million bpd.
Elsewhere, investors await the release of the American Petroleum Institute's inventory report after the close of trading on Wednesday for further indications on demand among the world's top consumer of oil. Separately, Thursday's government report could show that U.S. crude stockpiles rose by 3.9 million barrels for the week ending on February 12. Both reports are delayed by one day this week due to the Presidents Day Holiday.
The reports will be watched closely by market players after inventories at the Cushing Oil Hub rose by rose by 705,000 for the week ending on Feb. 12, according to global data provider Genscape, Inc. Inventories at Cushing, the main delivery point of Nymex oil, are approaching near full storage capacity.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.10% to an intraday low of 96.65. The index is down approximately 1.7% since the Bank of Japan unexpectedly lowered interest rates into negative territory late last month.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.