Oil Ends at 3-Week High as Hopes for Output Cut Linger
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OPEC delegates say no plan for Russia meeting: report
Oil futures settled at their highest level in three weeks on Thursday, but finished well below the session’s highs after news reports that officials from the Organization of the Petroleum Exporting Countries denied reports of plans for a meeting with Russia over potential output cuts.
March West Texas Intermediate crude rose 92 cents, or 2.9%, to settle at $33.22 a barrel on the New York Mercantile Exchange, down from an intraday high of $34.82. Prices, which marked a third straight session of gains, settled at their highest level since Jan. 7, according to FactSet data.
March Brent crude on London’s ICE Futures exchange rose 79 cents, or 2.4%, to $33.89 a barrel.
OPEC delegates said there were no plans to hold talks with Russia, Bloomberg reported. The market had found support from reports that Russia and Saudi Arabia may consider discussing a cut in current output. A Kremlin spokesman later said Russian oil officials hold frequent talks with their foreign counterparts, but it was too early to talk about any coordinated actions, state news agencies reported.
The market is seeing a lot of chatter with “very little substance,” said Kevin Kerr, president of Kerr Trading International.
Read: Talk of OPEC oil-producer ‘cease-fire’ met with skepticism. “Market players in both the stock market and the oil patch are getting a flurry of mixed messages, innuendos, and assumptions,” Kerr said. “This makes the markets highly jittery.”
Oil prices may still trade even lower but wouldn’t likely stay that low for very long, he said. “When we get an actual announcement of real production cuts, from both OPEC and non-OPEC nations, then we may be able to actively call some type of bottom” for prices.
WTI prices settled under $27 on Jan. 20. That was the lowest since May of 2003.
“The drop below $30 last week raised the chance that the impossible could become possible,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Russia and Saudi Arabia have both looked with horror at the continued slide in the market.”
In a note Thursday, T. Austin Sapp, commodity analyst at Schneider Electric, said both “diplomatic and strategic obstacles–notably Russia and Saudi Arabia’s differing views on the Syrian government and the latter’s obstinate dedication to the defense of market share–will prove major hindrances to cooperation.”
Prices had faltered early Thursday as traders digested the U.S. Energy Information Administration’s report Wednesday that showed domestic crude stockpiles grew by 8.4 million barrels in the week ended Jan. 22. The latest growth puts total U.S. crude inventories at 494.9 million barrels, levels not seen in eight decades.
Natural-gas futures erased earlier losses to end higher after the Energy Information Administration said supplies declined by a larger-than-expected 211 billion cubic feet last week. March natural gas rose 2.5 cents, or 1.2%, to $2.182 per million British thermal units.
February gasoline added 3.3 cents, or 3.2%, to $1.079 a gallon and February heating oil climbed by just over half a cent, or 0.5%, to $1.031 a gallon.