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Oil price rebounds in Asia as Iran sparks output cut hopes

Oil prices rose sharply in Asian trade on Wednesday on glimmers of hope of a producer cut-back and after a steep sell-off overnight.

Benchmark U.S. WTI crude oil futures were up 2 percent at $28.51 a barrel at close to noon in Asia, while global benchmark Brent was up 2.4 percent at $31.05 a barrel.

The rebound came after oil prices fell sharply in the prior U.S. and European sessions, with WTI finishing about 6 percent lower and Brent almost 8 percent lower.

Singapore-based Phillip Futures analyst Daniel Ang said that with major Asian stock markets closed this week for Lunar New Year public holidays, oil prices had probably fallen because "much needed price support from Chinese traders was likely not present."

Wednesday's rebound was also technical after this week's sharp decline, as supply-demand fundamentals have not changed, he added.

The battered commodity has lost some 70 percent of its value since the U.S. summer of 2014 and with OPEC so far having refused to cut to cut its 30-million-barrel a day production ceiling, a sustained recovery looks unlikely.

But some additional support appeared to come on Tuesday, in the form of a report on Iran's Press TV that Iranian oil minister Bijan Zangeneh had said Tehran was ready to negotiate with Saudi Arabia over current conditions in the oil market.

"We support any form of dialogue and cooperation with OPEC member states including Saudi Arabia," Zangeneh reportedly said.

Iran recently resumed oil exports after Western sanctions against the country were lifted, putting extra pressure on a market that was already oversupplied, in part due to OPEC's refusal to cut its production ceiling.

While the Iranian news may have given a boost to a market badly in need of a uplift, commentators are skeptical.

"Iran has been fairly adverse to cutting production…I would say this we have seen a lot of talk but never any action," said IG market strategist Evan Lucas.

In the last few weeks, the market was rife with speculation of a Russia-OPEC deal on curbing production - talk that temporarily pushed oil prices higher - but that buzz has since died down.

Still, Lucas expects some "OPEC interfering and jawboning" to happen now that prices are hitting near 13-year lows.

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