Oil capped a second weekly gain amid speculation that Opec and Russia will meet to discuss trimming crude production to bolster prices.
Russian energy minister Alexander Novak said that while Opec member Venezuela proposed a meeting next month, nothing is scheduled. Russia, after months of insisting it was happy to keep pumping at full throttle, suggested in recent comments it is open to compromise with Opec. Equities climbed as the Bank of Japan’s unexpected monetary stimulus boosted confidence that central banks remain vigilant for slowing economic growth.
“People are holding out some hope that an agreement will be reached to curb production,” said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. “There’s also a feeling that the central banks will be increasing stimulus to help the economy.”
Oil has pared its decline this year to about 9 per cent after plunging to a 12-year low. Global markets remain volatile because of concerns about brimming US stockpiles and rising exports from Iran following the removal of sanctions against the country. Opec’s January crude output climbed to the highest level in data compiled by Bloomberg going back 20 years as Indonesia’s membership was reactivated.
West Texas Intermediate for March delivery rose 40 cents to settle at $33.62 a barrel on the New York Mercantile Exchange. Futures advanced 4.4 per cent this week. Total volume traded was 44 per cent above the 100-day average.
Brent for March settlement, which expires Friday, rose 85 cents, or 2.5 per cent, to $34.74 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a $1.12 premium to WTI. The more-active April contract increased $1.19 to $35.99.
Futures retreated after The Wall Street Journal cited an unidentified "top Iranian official" as saying the nation wouldn't join an Opec-led production cut.
Four Opec representatives, who asked not to be identified, said they hadn’t heard of any plan for talks. One Gulf member said de facto leader Saudi Arabia had no proposal to trim production by as much as 5 per cent, after Interfax cited Mr Novak on Thursday saying that the country had suggested such a cut at previous Opec meetings.
Saudi Arabia is keen to defend market share and Russia’s inability to cut production in winter months makes coordination difficult. Until this week, Russia had repeatedly stated its goal of keeping oil production stable even as prices tumbled. The two countries’ opposing views on Syria, where Russia is President Bashar Al-Assad’s closest ally and Saudi Arabia seeks his removal, present another diplomatic obstacle.
Russia hasn’t begun internal discussions on how any production cuts would be implemented, Mr Novak said in an interview with Bloomberg Television, adding that a reduction is only possible if all exporters agree to participate.
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