Crude oil prices gained on Friday, elevated by new hopes over a proposed freeze in oil production and firm economic indicators from the United States and Germany that enlightened growth in fuel demand.
Oil production in Russia could drop in April while the country’s energy minister noted hopes that wide producer nations could agree to keep production put at January levels on a meeting in Doha later this month.
United States West Texas Intermediate crude futures climbed $1.33, to trade at $38.59 per barrel, more than 3 percent higher than the last session.
According to a commodity analyst, “You have declining supply in the United States and a declining rig rate. 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.”
Energy Information Administration indicated that the United States crude stocks gave an unexpected plunge while stocks at the Oklahoma hub slipped by more than 480,000 barrels because of a shutdown in the Keystone pipe.
A bounce back in financial markets also bolstered positivity over demand. The United States Federal Reserve stated that the country was on its way of further economic growth, while a rating agency noted that Europe’s largest economy, Germany, should witness a moderate acceleration in growth to 1.8 percent.
However, some market analysts still cautioned that oil prices could decline again, pulled down by a glut which will take some time to clear and surging production outside the United States.
As stated by a market analyst, “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.”
On Thursday, Iraq reported that exports from its southern ports had reached almost 3.5 million barrels per day by April, jumping from an average of 3.29 million barrels per day in March, while Iran said it would cooperate in a production freeze only once it had regained its pre sanctions level of 4 million barrels per day.
Meanwhile, on the ICE Futures Exchange in London, Brent crude for June delivery soared 2.99 percent to $40.61 per barrel.
Crude prices were also robust because of Thursday’s optimistic United States jobless claims data.
The United States Department of Labor reported the number of individuals filing for initial unemployment benefits in the week ended April 2 lowered by 9,000 to 267,000 from the previous week’s total of 276,000.
Results surpassed analysts’ expectation of jobless claims to sink by 6,000 to 270,000 last week.