“We furnish 20 percent of China’s crude oil imports – about one million barrels a day. But there’s a significant gap in what we are doing now, and what we can offer,” Nasser said. “Our investments in China’s entire oil value chain – integrating supply, refining, chemicals, lubes, distribution and marketing – don’t match our supply.”

Gasoline production is set to grow in 2016 due to the commissioning of Indian Oil Corp.'s 2.9 million mt/year continuous catalytic reformer at its greenfield 15 million mt/year (300,000 b/d) Paradip refinery, and completion of Bharat Petroleum Corp. Ltd.'s gasoline capacity expansion at its Kochi refinery by 6 million mt/year to 15.5 million mt/year (310,000 b/d) sometime in May.

Federal lawyers on Tuesday formally asked a judge in New Orleans to approve a record-breaking $20 billion-plus settlement agreement announced last July by the Department of Justice and five Gulf Coast states to resolve years of legal fighting about the 2010 Gulf oil spill.

China's total oil imports rose about 20 percent on year to the highest ever on a daily basis in February, when near 10-year low global oil prices drove buying from a group of new importers and for state and commercial stockpiling.

Analysts estimate that between 15 and 20 percent of 2016 U.S. oil production is hedged, and as little as 2 percent for 2017.

Brent crude, the global oil benchmark, rose 2.2% to $41.23 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 2.7% at $39.50 a barrel.

Oil prices have rallied by almost 50 per cent since dropping below $30 a barrel in January, tempting producers to grab any price that will allow them to keep operating through the worst commodity crash in more than 20 years.

Net Benefits of Prolonged Drop in Oil Prices Diminish or Turn Negative for Some Sectors.

Brent futures gained 40 cents to $37.47 a barrel as of 1519 GMT (10:19 a.m. EST), after settling 14 cents higher in the previous session. The crude benchmark is set to end the week with a gain of more than 5 percent.

Iran is working to regain market share after sanctions relief and exports had already risen by 500,000 bpd in February, Mohsen Ghamsari, director of international affairs at National Iranian Oil Co (NIOC), told Reuters on Tuesday.

Light, sweet crude oil prices on the New York market gained modestly to settle above $34/bbl on Mar. 1, and Russia state news agency TASS reported Russia’s Energy Minister Alexander Novak said a “critical mass” of oil-producing countries had agreed to freeze oil production.

Despite lower crude oil prices, EIA expects Canadian oil production to continue increasing through 2017. Canadian oil sands projects that were already under construction when prices began to fall in 2014 and that are expected to begin production in the next two years are the main driver of production growth.

Oil was up from the start of the week after data showing a slide in shale crude output and strong gasoline demand in the United States. Also bolstering prices was a meeting scheduled for mid-March by at least four major oil producers, including Saudi Arabia, to discuss a production freeze at January's highs.

U.S. Rig Count is down 12 rigs from last week to 502, with oil rigs down 13 to 400, and gas rigs up 1 to 102. Canadian Rig Count is down 31 rigs from last week to 175, with oil rigs down 26 to 83, and gas rigs down 5 to 92.

Halliburton Co., which provides well-drilling services for oil companies, is cutting 5,000 more jobs as the industry continues to struggle with slumping oil prices.