Oil edges up as producer meet overshadows U.S. stockbuild

By Barani Krishnan

NEW YORK (Reuters) - Oil prices ended up for a third straight day on Wednesday as buyers shrugged off record high U.S. crude stockpiles to focus on an OPEC plan to freeze production, keeping alive the notion that market has bottomed from a near two-year selloff.

OPEC member Venezuela said a total of 15 oil producing countries will attend a meeting planned later this month on freezing output at January's highs.

Diplomatic activity between the Organization of the Petroleum Exporting Countries and other major producers to address the supply glut by freezing output has helped feed a 25 percent price gain in the last 2-1/2 weeks from 12-year lows.

 

Oil prices briefly dipped on U.S. government data that showed crude stockpiles at record highs for the third consecutive week after rising 10.4 million barrels to 518 million barrels last week. [EIA/S]

Brent futures settled up 12 cents at $36.93 a barrel. They have risen more than $1.80, or 5 percent, since Friday's close.

U.S. crude's West Texas Intermediate (WTI) futures finished up 26 cents at $34.66 a barrel. Only in mid-February, WTI fell to a 2003 low of $26.05.

"It seems more likely that $26 is in the rear view mirror at the moment," Anthony Headrick, energy market analyst at CHS Hedging, a commodities broker in Saint Paul, Minnesota, said.

"Fundamentals remain bearish but prospects of OPEC freeze and downward cycle in U.S. output will likely limit a retest of the recent lows."

Other analysts were confident that the market has bottomed out.

"We believe prices will see modest gains over the course of the year and we have likely seen the worst of price declines, unless the global economy actually moves into recession," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, who helps manage some $125 billion.

Some traders were less bullish, saying the selloff will likely return as crude inventories build further from the U.S. refinery spring maintenance season.

"We could be in store for another large move down over the next few weeks," said Tariq Zahir at Tyche Capital Advisors who bets nearby WTI contracts will weaken against forwards.

(Additional reporting by Alex Lawler in London; Editing by Susan Fenton, David Gregorio, Chizu Nomiyama and Marguerita Choy)