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Oil market scores modest gains after turbulent January

Saturday, 30 January 2016 4:42 AM [ Last Update: Saturday, 30 January 2016 5:11 AM ]

Oil prices make modest gains at the end of a turbulent January.

Oil prices have made modest gains at the end of a turbulent January that pushed prices sharply lower amid worries about global glut.

US benchmark West Texas Intermediate (WTI) for delivery in March was traded on the New York Mercantile Exchange on Friday at $33.62 a barrel, up 40 cents,

In London, North Sea Brent for March rose 85 cents to $34.74.

The prices scored gains on the strength of speculation that Russia and the Organization of the Petroleum Exporting Countries (OPEC) plan a meeting to discuss oil output cuts to shore up prices.

The oil market has scored a second straight week of advances after having plunged to 12-year lows early this month.

An oil pipe is seen in front of a drilling rig at a Lukoil-owned oil field outside the West Siberian city of Kogalym, Russia, January 25, 2016. (Reuters)

Mike Lynch, analyst with Strategic Energy and Economic Research, said there was “no strong reason” for Friday’s rise in prices.

“The talk of Russia and OPEC maybe meeting and working out a production cut has made people think we've reached a bottom and it's time to buy back in the market,” Lynch said.

On Thursday, Russian Energy Minister Alexander Novak said Moscow is ready to discuss “coordinating” with OPEC and mutual production cuts of up to 5%.

Novak’s statement led to the highest jump in oil prices in three weeks to nearly $36 a barrel.

“This week's big story (for commodities) has, of course, been the rebound in oil prices on unconfirmed reports that Russia and OPEC may finally be willing to agree coordinated cuts in output,” Capital Economics analyst Caroline Bain said.

Prices have fallen by about three quarters since mid-2014 due to market oversupply and weaker demand growth for crude.

A Russian deputy prime minister said oil companies should decide whether to cut production to boost prices.

"If prices remain at non-profitable levels for an extended period, investments will have to be corrected and this will lead to lower production, but this will not be in the interest of the state," Arkady Dvorkovich said.

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