Oil rebounded this week from recent lows after OPEC sprang a surprise September meeting, at which Saudi Arabia hinted producers could agree to limit output.
At 1600 GMT on Friday, West Texas Intermediate (WTI) crude for September delivery added 84 cents at $44.33 a barrel compared with Thursday’s closing level.
European benchmark Brent North Sea crude for October rose 65 cents to $46.69 per barrel.
Both contracts traded far above the three-month lows forged early last week, when prices had tanked into a bear market—losing 20 percent from June peaks.
The Organization of Petroleum Exporting Countries (OPEC), whose 14 nations pump one third of global oil, on Monday called an informal meeting that will take place on the sidelines of the International Energy Forum in Algeria in late September.
News of the unscheduled gathering, ahead of OPEC’s next regular production meet in Vienna on November 30, sparked speculation of fresh measures to stabilize the market—and sent prices soaring on Monday.
They powered even higher on Thursday after Saudi Arabia’s powerful oil minister hinted that producers could agree to limit output.
Saudi oil chief Khalid al-Falih was reported as saying that the informal OPEC meeting would be an occasion for producers to discuss “any possible action”.
Prices jumped more than four percent in reaction to the comments, which were seen as a positive development in a market grappling with a supply glut.
‘Stormed back to life’ –
“Crude oil prices have stormed back to life over the past couple of weeks, albeit in a volatile manner,” City Index analyst Fawad Razaqzada told AFP on Friday.
“The latest trigger behind the rally has been attributed in the media to comments from Saudi Arabia’s minister, who on Thursday said his country—which is the largest OPEC oil producer—could participate in co-ordinated action to help balance the crude oil market.
“I am not sure if this is the main reason, for prices had already bounced last week.
“What’s more, similar promises were made earlier this year and no action taken. Yet oil prices were able to march on regardless.”
Thursday’s rebound follows a drop in prices earlier this week after official US data showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply.
A monthly report from OPEC also showed Saudi Arabian oil production was at nearly 10.5 million barrels per day in July—a record high, above peak levels seen the same time last year.
OPEC meetings earlier this year failed to agree on any production ceiling, as key producers preferred instead to fight for market share in a Saudi-led strategy.
“The comments from Saudi oil minister Khalid al-Falih … have served to fan the flames of the OPEC announcement in further ramping up expectations for some collaboration amongst oil producing nations to support prices,” said analyst David Cheetham at brokers XTB.
“Whether or not an arrangement to support the oil price will be agreed upon is almost neither here nor there at the moment, with just the possibility of reducing output providing enough reason for the market to rally this week.”
Oil prices had entered a “bear” market last week on oversupply concerns, falling more than 20 percent and closing below $40 a barrel for the first time since April.
The International Energy Agency (IEA) meanwhile gave a mixed outlook for crude on Thursday.
The Paris-based IEA energy watchdog cut its 2017 forecast for oil demand growth because of a weaker outlook for the world economy following Britain’s vote to leave the European Union.
On the other hand, oil oversupply, which has again been weighing on crude prices since June, will disappear in the latter part of 2016, the IEA predicted, reports AFP.