You are here
Oil prices soar on report that UAE offers talks on output cuts
[NEW YORK] Oil prices soared Friday, with US crude rebounding from a 2003 low, on reports that Opec was willing to organise output cuts that could ease the global oversupply.
US benchmark West Texas Intermediate for March delivery shot up US$3.23 (12.3 per cent) to US$29.44 a barrel on the New York Mercantile Exchange.
The contract had lost more than US$4 in the prior four sessions, sinking to the lowest level since May 2003.
Brent crude for April delivery, the European benchmark, finished at US$33.36 a barrel in London, up US$3.30 (11 per cent) from Thursday's settlement.
A big catalyst was a Wall Street Journal report that United Arab Emirates oil minister Suhail Al Mazrouei had said the Opec cartel was willing to cooperate with other producers on trimming crude output.
The report was apparently based on a reporter's tweet of the minister's interview with Sky News Arabia. But it was enough to spark a huge turnaround in the market.
James Williams of WTRG Economics discounted the report.
"We have another series of rumors about Opec based upon a comment out of UAE and another attempt to support prices out of Venezuela, which has scaled back its requests and is just asking for Opec and non-Opec exporters to agree not to increase production," he said.
Bart Melek of TD Securities said a six per cent drop in US crude oil drilling activity reported by Baker Hughes had also reinforced sentiment.
The US rig count fell by 28 to 439 last week, as low as it was in 2010, Mr Melek said.
"So ultimately we should expect lower production... and with lower production in the US, it's more likely Saudi Arabia and other Opec members might want to decrease output."