Oil prices recovered substantially today after data released yesterday showed that crude stocks in the U.S. rose at a slower pace than expected. the announcement by oil producers that they are set to meet next month over the proposal of freezing production has also aided the rally in oil prices.

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During the early European hours, Brent Crude jumped by more than 2% to $39.52 per barrel while West Texas Intermediate surged 2.12% to $37.11.

The American Petroleum Institute released data showing that refineries have visibly reduced their output while distillate and gasoline inventories have shrunk on a weekly basis. Crude inventories grew by 1.5 million barrels to 523 million during the week ended on March 11. This number came lower against forecasts of an increase of 3.4 million barrels.

IEA feels prices reached bottom

At the same time, gasoline reserved declined by 1.2 million barrels versus the projection of a 2.3 million barrel decline. The data came on the backdrop of the International Energy Agency (IEA) saying that it is likely that prices have bottomed out. The agency had stated in its report published on Friday that OPEC and non-OPEC output might decline, and the U.S. dollar could weaken further.

Meanwhile, most of the oil producing nations from both OPEC and non-OPEC are scheduled to meet in Doha on April 17. Mohammed Bin Saleh Al-Sada, Qatari oil minister, said that a total of 15 OPEC and non-OPEC producers, representing 73% of global oil output supported the initiative.

It is to be noted that Qatar, Saudi Arabia and Venezuela along with Russia, a non-OPEC member, entered into an informal agreement to freeze production levels at January levels. However, Iran had refused to cooperate in such an agreement and pledged to continue producing until it reaches 4 million barrels of oil output per day. Analysts are hopeful that an agreement could be reached even if Iran is not part of it though such an agreement would not be ideal.