Oil rose to $35 a barrel on Thursday after Iran welcomed plans by Russia and Saudi Arabia to  freeze output and an industry report showed a surprise drop in U.S. inventories.

The gain added to a more than 7 percent surge in the previous session, which came even though analysts said the market had overreacted to Iran’s support for the caps and the Russian-Saudi move would not likely reduce the global surplus.

Brent LCOc1 rose 60 cents to $35.10 a barrel by 1248 GMT, having closed 7.2 percent higher in the previous session. U.S. crude CLc1 gained 65 cents to $31.31.

“It’s a continuation of yesterday’s move,” said Carsten Fritsch, analyst at Commerzbank. “What we see still is extreme volatility. I would not be surprised to see prices retreating again by a big margin in coming days.”

Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar on Wednesday but did not say whether Iran would cap its output in keeping with the move by Russia and Saudi Arabia.

Copyright: Reuters