Crude oil prices rallied in response to the sense of optimism from the United States, where labor has improved despite weakness elsewhere in the global economy.
Advertisement
The country’s production of crude and a light oil called condensate is on track to reach 10.89 million barrels a day in January, up 83,000 barrels a day – or the biggest monthly increase since September 2014, according to Bloomberg estimates based on Energy Ministry data.
The comments initially sent Brent crude up more than 8 per cent to almost $36 a barrel and USA crude up nearly 8 per cent, cresting just below $35.
Another source told Reuters that the initiative to cut production came from Venezuela and Algeria, rather than the Saudi kingdom.
Novak said on Thursday that it was reasonable to discuss the situation on the oil market and that OPEC was trying to organise a meeting with other producers next month.
“Indeed, these parameters were proposed, to cut production by each country by up to 5 percent”, Novak said.
Earlier this week, the head of the Russian state-owned oil transportation monopoly Transneft Nikolay Tokarev said cutting production is one way to push up prices and Russia can do that, but it would have to happen in the summer.
However, the pain for large oil-producing nations has intensified this year as oil prices have plunged to 12-year lows and some analysts warn they could fall to $20 a barrel or lower.
Oil pared gains near a three-week high as Russian Federation said that although it’s prepared to discuss output with the Organization of Petroleum Exporting Countries, no action is now planned.
USA crude climbed 21 cents to $33.43 a barrel, having settled up 92 cents, or 2.9 per cent, at $33.22.
Iranian Oil Minister Bijan Zanganeh, attending a Franco-Iranian summit in Paris on Thursday, said Iran had not been contacted by Russian Federation about any cuts in output.
A little over a week ago the value of Brent slumped to 13 year lows below in the aftermath of some nuclear sanctions being lifted from Iran, a move which will lead to huge new oil exports being made available. “But overall we expect a rebound in oil prices”.
Advertisement
That appeared to pour cold water on possible joint OPEC and non-OPEC production cuts mentioned by Russian Energy Minister Alexander Novak on Thursday. Saudi Arabia has said that if it cuts production, that would only allow higher-cost producers in the US and elsewhere to drill more wells.
