London: Oil futures edged up on Wednesday to near $40 per barrel as a weaker dollar spurred interest in riskier assets and the International Energy Agency (IEA) said expectations for a deluge of oil from Iran were misplaced.
Brent futures climbed 46 cents to $39.60 a barrel as of 1000 GMT (3:30 p.m. in India) after settling down $1.13 in the previous session.
US crude rose 61 cents to $38.89 a barrel after ending Tuesday down $1.11.
The dollar index fell, after slipping to an eight-day low in the previous session on dovish comments by Federal Reserve Chair Janet Yellen about possible interest rate rises.
A weaker dollar makes greenback-denominated commodities cheaper for holders of other currencies.
“One of the main reasons for Yellen’s dovish stance is the low oil price and she made a direct reference to it,” said Olivier Jakob from Petromatrix consultancy.
“For Yellen, low oil prices are not only contributing to low inflation expectations but they are a threat to global economic growth due to the financial stress they are imposing on oil-producing economies,” Mr Jakob said.
Oil prices fell about 3 per cent in the previous session after Kuwait and Saudi Arabia said they would resume production at the jointly operated 300,000-barrels-per-day Khafji field even as major oil producers consider an output freeze.
The freeze idea emerged after prices fell below $30 a barrel in January from as high as $115 in June 2014 on global oversupply spurred by US production growth and rising output from oil exporter group OPEC (Organization of Petroleum Exporting Countries).
The International Energy Agency, which oversees energy policies of industrialised nations, forecasts the global stock build to continue this year.
But it said on Wednesday Iran was not adding as many barrels into the market as expected despite the easing of international sanctions against Tehran in January.
“It was misleading to believe that there would be a huge amount of new Iranian crude and natural gas production entering the market in the short term,” Fatih Birol, the IEA’s executive director, told Reuters.
OPEC member Iran is expected to attend an oil producers meeting in Doha on April 17 to discuss the proposed freeze, although it may not take part in the talks.
Later on Wednesday, the US government releases official crude inventory data.
The American Petroleum Institute, an industry group, on Tuesday said US crude stocks likely rose last week by 2.6 million barrels to 534.4 million barrels, which would be a new record high for a seventh straight week.