Crude oil prices reversed early losses on Friday, with Brent on track for its first weekly gain in a month, as strong US gasoline demand and hopes of OPEC action outweighed concerns over fundamental oversupply.
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Oil has been volatile over the past two weeks as investors assessed the prospects of a deal announced by these four producers that seeks to freeze future production at the January levels.
Thursday’s statement was followed by a Friday meeting between Saudi and Russian officials in Riyadh.
Brent crude was up 90 cents, or 2.6 percent, at $36.19 a barrel by 12:26 p.m. EST (1726 GMT).
April West Texas Intermediate crude fell 29 cents, or 0.9%, to settle at $32.78 a barrel on the New York Mercantile Exchange.
The rally in crude also boosted gasoline futures RBc1 , which settled up almost 5 percent after rallying from early in the day on strong demand for the motor fuel.
Officially, the US government reported on Wednesday that Cushing added 333,000 barrels last week to reach 65.1 million for a fourth straight week of record highs. “Strong gasoline demand led to a stock decline”, ANZ said on Thursday. In monthly data, which doesn’t line up exactly with weekly data, inventories last exceeded 500 million barrels in 1930.
Oil analysts say that the global glut of oil is more than enough to absorb increased demand, likely leading to a prolonged period of low prices.
Later on Friday, traders will be looking for the latest United States rig count, which will be released by oil-field-services firm Baker Hughes The measure – a rough proxy for the activity in the industry – is down 68 per cent since October 2014. Global crude production is outpacing demand following a boom in US shale oil and after a decision by OPEC a year ago not to cut production in order to defend market share.
The proposal by Saudi Arabia, Russia, Venezuela and Qatar has been branded “a joke” by Iran, while Iraq, one of the largest contributors to rising Opec output, has said it supports a freeze, but its production will continue to rise.
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April natural gas fell rose less than a cent to $1.791 per million British thermal units, with the contract down 4.1% for the week.
