Oil prices jumped as Friday trading progressed, buoyed by reports from the OPEC meeting that said the cartel and its alliance had reached an agreement to curb production.
The Wall Street Journal and others said OPEC and other non-OPEC majors, primarily Russia, had agreed to a 1.2 million barrel-a-day cut in output, under the deal still being negotiated.
And earlier, even the speculation was enough to put a charge in oil prices. The development enlivened the bulls after earlier reports had Saudi Arabia saying it remained skeptical of an agreement among major producers to cut output given Russia’s trepidation. Members of the Organization of the Petroleum Exporting Countries were deliberating as the Saudis — the de facto leaders of OPEC — are trying to convince the Russians to join a significant production cut that would help soak up a global oil supply glut.
Against this backdrop, West Texas Intermediate crude for January delivery
rose $2.46, or 4.7%, at $53.87 a barrel on the New York Mercantile Exchange. The contract is headed for a roughly 5.7% weekly gain.
Global benchmark February Brent crude
rose $2.91, or 4.9%, to $63.01 a barrel on ICE Futures Europe. It is up some 6% for the week.
The cartel and its wider alliance is under pressure to support prices, which have fallen by more than 30% since reaching multiyear highs as recently as early October.
Growing concerns that oil producers won’t reach an agreement to aggressively reduce output has weighed on prices, but U.S. government data revealing the first decline in domestic crude supplies in 11 weeks did offer a brief respite in prices from the session’s lows on Thursday and contributed to Friday’s early move.
The decline in crude prices also comes as jitters pegged to international trade relations between China and the U.S. escalated, and raised concerns about demand for oil. Market tension intensified after the arrest of Huawei Technologies’s CFO Meng Wanzhou in Canada at the request of the U.S.
“Prices should stabilize, and then the bleeding should stop. But what about OPEC going forward?” said Stephen Innes, head of trading for APAC, at Oanda. “Personally, none of this will soon matter as the new kids on the block, the new mega super producer Russia and USA will have continued to vie for a stack controlling interest in oil prices. And by the law of nature, only the strong survive.”
On Thursday, the Energy Information Administration said U.S. crude supplies fell by 7.3 million barrels for the week ended Nov. 30. That marked the EIA’s first reported weekly supply decline in 11 weeks.
Analysts surveyed by S&P Global Platts had forecast a decline of 2.39 million barrels, while the American Petroleum Institute on Tuesday reported a climb of 5.4 million barrels.
Gasoline stockpiles rose by 1.7 million barrels last week, while distillate stockpiles climbed by 3.8 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply increases of 357,000 barrels in gasoline and 1.25 million barrels in distillate inventories.
On Nymex, January gasoline
rose 1.3% to $1.45 a gallon and January heating
was at $1.8766 a gallon, up 1%.
January natural gas
rose 0.4% to $4.344 per million British thermal units. The EIA will release its weekly data on natural-gas supplies on Friday, a day later than usual because of Wednesday’s day of mourning.
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