Agence France-Presse 07:30 AM March 8th, 2016
Oil
prices surged higher Monday, pushing Brent above $40 a barrel, in a second
session of solid gains as investors hope for relief from the global oversupply.
US
benchmark West Texas Intermediate (WTI) for delivery in April jumped $1.98
to $37.90 a barrel on the New York Mercantile Exchange.
In
London, Brent North Sea crude for May delivery advanced $2.12 to $40.84 a
barrel, its highest close since early December.
“Despite
the fact that stockpiles are going higher, the market is hoping that we’re
going to see a reduction in production in the US,” said Bart Melek of TD
Securities.
“Reductions
could very well be a lot stronger than anyone thinks mainly because drilling
activity is considerably down,” he said. The number of active drilling rigs in
the United States fell last week to the lowest level since December 2009.
Comments
on production by the energy minister of the United Arab Emirates on Monday were
taken as a positive signal. Suhail Mazrouei said current prices “are forcing
everyone to freeze. So I think it is happening as we speak.”
Saudi
Arabia, Russia, Qatar and Venezuela last month agreed to freeze output at
January levels if other producers followed suit.
“All
this talk about a freeze has been helping to sustain the recent rally,” said
John Kilduff of Again Capital.
But
he pointed out the market still has no details about a producers meeting that
could take place on March 20.
Melek
said the market found positive signals for oil demand after China unveiled over
the weekend its five-year economic plan and the US reported Friday robust jobs
growth of 242,000 payrolls in February.
“It’s
all reversing a lot of the negativity we’ve seen earlier in the year,” Melek said.
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