Oil prices rebound sharply

LONDON: Oil prices rose Tuesday, rebounding from heavy losses that were sparked by a report that Saudi Arabia was close to completing an oilfield expansion.

Analysts said the gains, partly prompted by a slightly weaker dollar, would likely be short-lived due to lingering worries about a global supply glut.

At 1700 GMT, New York's benchmark West Texas Intermediate (WTI) for delivery in June was up $1.28 at $43.92 per barrel.

Brent North Sea crude for June delivery gained $1.25 to $45.73 a barrel compared with Monday's closing level.

Both contracts had dived on Monday after Bloomberg News said Saudi state oil company Aramco would complete the expansion of its Shaybah oilfield by the end of May, allowing the world's largest exporter to maintain total capacity at 12 million barrels a day.

Those losses broke a week of gains on the back of upbeat data from China, the world's biggest energy user, and speculation that talks to limit production could be restarted.

But Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP: "Although we are seeing some positive moves in our trading session today, they have come on very light volumes."

He noted that attention would focus on Wednesday's data on US commercial crude supplies, which are currently near historic highs.

The US government's Department of Energy will publish commercial American crude stockpiles for the week ending April 22.

Also on Wednesday, the Federal Reserve will end its latest policy meeting. While it is not expected to unveil any new measures, dealers will hope for some forward guidance on monetary policy and any future interest rate rises.

The world oil market has been hammered over the past two years by weak demand, overproduction, a slowing global economy -- particularly China -- and a supply glut.

Talks this month aimed at addressing the output problem collapsed in Doha as major producer Saudi Arabia refused to take part without key rival Iran.

Iran is unwilling to make output cuts as it returns to the market after years of Western-imposed nuclear-linked sanctions.

"Crude oil prices have been consolidating inside narrow ranges over the past several trading days after wrong-footing many traders in the aftermath of the Russia-OPEC meeting last week," said City Index analyst Fawad Razaqzada.

"The outcome of that meeting was supposed to cause oil prices to collapse -- as, after all, many people had attributed the (market) rally to an expected oil production freeze deal, which ultimately failed to materialise."

Separately on Monday, Saudi Arabia unveiled a sweeping reform plan to wean its economy away from oil dependence. The measures include the possible public offering of less than five percent of state oil firm Saudi Aramco, which a top prince said is worth in total $2-2.5 trillion.