Oil prices rise on optimism over supply, Doha meeting
Oil prices rose on Friday, lifted by hopes that a punishing global excess of crude oil could be nearing a tipping point and firm economic indicators from the United States and Germany that cast a positive light on growth in fuel demand.
London: Oil prices rose on Friday, lifted by hopes that a punishing global excess of crude oil could be nearing a tipping point and firm economic indicators from the United States and Germany that cast a positive light on growth in fuel demand.
Declines in US shale oil output and optimism over a proposed freeze in oil production, to be discussed by producers at a meeting in Doha on April 17, in particular helped to boost prices.
International Brent futures were $1.85 higher at $41.28 by 1306 GMT and were on track for a weekly gain of more than 6.5 percent.
Front-month US West Texas Intermediate (WTI) crude futures were trading $2 higher at $39.26 a barrel, more than 5 percent above the previous close.
"You have declining supply in the United States and a declining rig rate," said Bjarne Schieldrop, chief commodities analyst at SEB Bank in Oslo.
"You mix that with outages in Nigeria and put Doha on top of it, and your eyes are looking towards the tightening of the market."
Russia`s oil production could fall in April, sources said on Friday, while the country`s energy minister expressed hopes that producer nations could agree on an output freeze at the Doha meeting.
US crude stocks marked a surprise decline, Energy Information Administration data showed, while stocks at the Cushing, Oklahoma hub dropped by more than 480,000 barrels due to a shutdown of the Keystone pipeline.
Summer maintenance in the North Sea fields that form the basis of the Brent benchmark also helped boost near-term prices.
Bank of America Merrill Lynch said in a note that US shale production was in "freefall" and that "as the global oil glut starts to clear, crude oil should lead the way".
A rebound in financial markets also boosted optimism over demand. The US Federal Reserve said the country was on the path of more economic growth, while rating agency Moody`s said Germany, Europe`s biggest economy, should see a slight acceleration in growth to 1.8 percent.
Still, some warned that prices could fall in the near term.
A surplus of spot oil was growing in Asia due to refinery maintenance. Additionally, Iraq said exports from its southern ports would rise in April, while Iran has refused to take part in any production freeze until it has regained its pre-sanctions level of 4 million bpd.
"We believe the current oil price is unsustainable and expect a fundamental price recovery when markets move into better balance in mid- to late-2H16," investment bank Jefferies said.