Picture: THINKSTOCK
Picture: THINKSTOCK

SINGAPORE — Crude oil prices pushed higher on Wednesday after Iran said it was open to co-operation with Saudi Arabia, partly recovering from an 8% fall in the previous session on the concern over demand and weak equities.

Liquidity in Asia remained low as China is closed all week due to the Lunar New Year holiday, while South Korea was also off on Wednesday and Japan will take a public holiday on Thursday.

Prices were supported by comments from Iran’s oil minister that Tehran was ready to negotiate with Saudi Arabia over the current conditions in global oil markets.

The International Energy Agency (IEA), meanwhile, said the Organisation of the Petroleum Exporting Countries (Opec) was unlikely to cut a deal with other producers to reduce ballooning output.

It predicted the world would store unwanted oil for most of 2016 as declines in US oil output took time.

"Another day of heightened volatility is expected as concern over global growth prospects remains elevated," analysts at ANZ said in a note.

The front-month Brent contract was 70c, or 2.3%, higher at $31.02 a barrel by 4.37am GMT. The contract fell for a fourth consecutive session on Tuesday to end down $2.56, or 7.8%. US crude for March delivery was 59c higher at $28.53 a barrel. The contract fell 5.9% on Tuesday to settle $1.75 lower.

Seeking protection against wild swings in prices, oil traders have scrambled to scoop up options, sending a key volatility index to its highest level since the worst of the global economic crisis in 2008, data showed.

Oil investors will turn to weekly inventory data by US Energy Information Administration (EIA) later on Wednesday, with analysts surveyed by Reuters predicting a 3.6-million barrel rise in crude stocks last week.

The American Petroleum Institute (API), an industry group, reported a build of 2.4-million barrels in US crude stockpiles for last week.

"Oil remains susceptible to further weakness as the market digests (Tuesday’s) data," ANZ said.

Weighing on the general outlook for oil prices is a global demand growth slowdown. The US Energy Information Administration (EIA) this week cut its 2016 world oil demand growth forecast by 180,000 barrels a day, with demand to hit 95.02-million barrels a day, up 1.24-million barrels a day from 2015.

Top oil merchant Vitol also said this week that it expected a slowdown in global oil demand growth from 1.6-million barrels a day last year to 800,000-1-million barrels a day in 2016.

Reuters