LONDON: Oil rose on Friday, ending the week sharply higher, on expectations of a deal by major exporters to cut production to reduce the massive over-supply that has sent prices tumbling.
Brent futures LCOc1 have jumped more than a quarter since hitting an intra-day low of $27.10 a barrel on Jan. 20. It hit an intraday high on Thursday of $35.84.
Brent had risen 18 cents to $34.07 a barrel by 1020 GMT (5:20 a.m. ET), after ending up 79 cents, or 2.4 percent on Thursday, and is heading for its fourth straight session of gains.
U.S. crude CLc1 climbed 26 cents to $33.48 a barrel, having settled up 92 cents, or 2.9 percent, at $33.22 on Thursday. U.S. crude is also set for almost 6 percent weekly gain.
Russia’s Deputy Prime Minister Arkady Dvorkovich said on Friday Russian output could decline as a result of lower investment, but the state would not intervene to balance the market.
The comment appeared to be pouring cold water on the idea of joint OPEC and non-OPEC production cuts mentioned by Russian Energy Minister Alexander Novak on Thursday.
However many analysts think there is still a good chance of a deal.
“As the headlines fly it is difficult to be absolutely sure about each word used but we don’t read ‘no meeting scheduled yet’ the same as ‘no meeting scheduled’,” Olivier Jakob, analyst at Petromatrix in Zug, Switzerland said.
“The ‘yet’ is not necessarily a ‘nyet’ and we can therefore continue to speculate about a possible meeting.”
Brent futures rallied as much as 8.2 percent after Russia said on Thursday that OPEC’s largest producer Saudi Arabia had proposed oil production cuts of up to 5 percent.
“While we view this outcome as unlikely, a 5 percent production cut by just Saudi Arabia and Russia would be sufficient to bring the market close to balance,” Jefferies said in a research note on Friday, referring to Russia’s comment.
Figures from Iran underlined the fact that there is no end in sight to the glut in the market that has pummeled prices unless there is a cut in production by major exporters.
Iran’s oil exports are set to rise more than a fifth in January and February from last year’s daily average, data from a source with knowledge of its loading schedules shows, revealing how Tehran is ramping up sales after lifting of sanctions.