Oil prices rebound sharply

World oil prices rebounded sharply last week on signs producers may still agree to limit output to tackle a supply glut that has sent crude tumbling for more than 18 months.

By Friday, US benchmark West Texas Intermediate (WTI) for delivery in April stood at $34.24 a barrel compared with $29.96 for the expired March contract one week earlier.

In London, benchmark Brent North Sea crude for April delivery jumped to $36.66 a barrel from $33.53 a week earlier.

“Crude oil prices have stormed back this week,” said Fawad Razaqzada, analyst at City Index trading group.

“Both contracts have been supported first and foremost by a general improvement in risk sentiment, with equities also bouncing back buoyantly in recent days.

“More specific to oil, signs of a noticeable crude output decline in the US and on-going talks about an oil production freeze between some OPEC and non-OPEC countries are both helping to provide support, at least for the time being,” he added.

Oil prices saved their best for Friday, with Brent reaching a near two-month high at $36.84 a barrel.

New York crude hit a month high at $34.35 a barrel.

Crude futures won a late lift from official data showing that the US economy grew at an annual rate of 1.0 percent in the fourth quarter, far stronger than expected. 

Oil prices had already risen strongly on Thursday after Venezuelan oil minister Eulogio Del Pino said his country was preparing to meet other producers in March to discuss ways to stabilise the market.

Prices were higher “due to speculation that there would be some kind of agreement between the major oil producers to freeze production”, IG market strategist Bernard Aw told AFP, adding that he doubted anything would materialise.

Prices have been extremely volatile in recent weeks on uncertainty over whether the Organization of Petroleum Exporting Countries will stop pumping at a pace that is outstripping demand.

Venezuela had been working hard to seal an agreement with fellow OPEC producers to trim their output, with the South American country’s economy having been badly hurt by sliding prices.

OPEC heavyweight Saudi Arabia, along with Venezuela, Qatar and non-OPEC producer Russia, last week announced a preliminary deal to freeze output at January levels, but only if other major producers followed suit.

But Iran has reacted coldly to the plan and is ramping up production after nuclear-linked Western economic sanctions were recently lifted.

After beginning the week lower, oil prices stabilised on Wednesday as traders looked past an increase in US crude inventories to a welcome drop in gasoline supplies.

Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.