London: Oil prices climbed above $45 a barrel in New York for the first time in three weeks amid speculation that crude producers will revive talks to stabilise prices.
Futures rose as much as 1.4 per cent after climbing 6.4 per cent last week as Saudi Arabia signalled it’s prepared to discuss stabilising markets at informal Opec discussions next month. Russia is open to talks for a joint output freeze “if necessary,” Energy Minister Alexander Novak told Saudi Arabian newspaper Asharq Al-Awsat. US producers added rigs for a seventh week, the longest run since 2014, according to Baker Hughes data on Friday.
Oil has rebounded more than 10 per cent since closing below $40 a barrel and tumbling into a bear market earlier this month. Saudi Arabian Energy Minister Khalid Al Falih said in a statement last week that talks with Organisation of Petroleum Exporting Countries (Opec) members and other producers may result in action to stabilize the market, according to the state-run Saudi Press Agency.
“A freeze would only be a boost to market sentiment,” Mike Wittner, head of oil market research at Societe Generale, said in a report. “A freeze would not have any impact on actual crude supply.”
West Texas Intermediate (WTI) for September delivery rose as much as 64 cents to $45.13 a barrel on the New York Mercantile Exchange, the highest since July 21, and was at $45.08 at 9:03am in London. Prices advanced $1 to settle at $44.49 a barrel on Friday, the highest since July 21. Total volume traded was about 28 per cent below the 100-day average.
Brent for October settlement added as much as 64 cents, or 1.4 per cent, to $47.61 a barrel on the London-based ICE Futures Europe exchange. The contract increased 2 per cent to close at $46.97 on Friday. The global benchmark crude traded at a $1.76 premium to WTI for October delivery.
Rigs targeting crude in the US increased by 15 to 396, the highest level since February, according to data from Baker Hughes. Explorers have now added 66 rigs since June 24, led by rising activity in the Permian Basin.
The current cycle of low oil prices will end by late-2017, while a balancing of the market will take place next year, Russia’s Novak said in an interview with newspaper Asharq Al-Awsat. Venezuela has begun coordinating efforts among Opec members and producers outside of the group including Russia, Venezuelan President Nicolas Maduro said on state television. Nigeria will pump no more than 1.5 million barrels a day of oil this year as sustained attacks by militants have damaged infrastructure including its biggest export terminal, Minister of State for Petroleum Emmanuel Kachikwu said in an interview Friday.