Oil prices wavered this morning, dipping in and out of the red, as speculation swirled around oil markets over the consequences of a deal between Saudi Arabia and Russia to freeze output at January levels.
Brent crude, the global benchmark, reversed earlier losses, rising 1.12 per cent to $32.54 per barrel. Meanwhile, West Texas Intermediate (WTI) crude, the US benchmark, added 0.69 per cent to $29.24.
Crude had initially fallen after Mehdi Asali, Iran's Opec envoy, told the country's Shargh newspaper it will continue to increase oil output until it reaches its pre-sanctions production level.
Asali also called an Iranian freeze illogical and said the current drop in prices was caused by other producers lifting output while Iran was under sanctions.
Saudi Arabia and Russia agreed to hold oil output at January levels yesterday, if other producers join. Nevertheless, they stopped short of agreeing to production cuts.
Iraq, Qatar and Venezuela said they will freeze output at January levels provided a deal can be agreed. Meanwhile, it's thought Iran could be offered special terms to freeze oil production levels.
Prices jumped on news of the deal yesterday, but investors subsequently reigned in their expectations, on the realisation there will be no immediate supply cuts to tackle the global glut.
"It was a 'buy the rumour, sell the fact' event," said Ben Le Brun, market analyst at Sydney's OptionsXpress.
"The market is coming around to the idea that it is not bad news, but not as good news as it was anticipating," he said, adding that investors were hoping for production cuts.