Oil prices surged last Friday on world markets, following a report in the Wall Street Journal quoting UAE’s minister of energy as saying the Organisation of the Petroleum Exporting Countries was willing to cooperate with other producers on trimming the global crude supply glut.
US benchmark West Texas Intermediate for March delivery shot up $3.23 (12.3 percent) to $29.44 a barrel on the New York Mercantile Exchange. The contract had lost more than $4 in the prior four sessions, sinking to the lowest level since May 2003.
Brent crude for April delivery, the European benchmark, finished at $33.36 a barrel in London, up $3.30 (11 percent) from Thursday’s settlement.
In Friday deals, Brent North Sea crude for delivery in April jumped $1.60, or 5.3 per cent, to $31.66 a barrel.
UAE’s minister of energy, Suhail al-Mazrouei, last Friday said he expects supply levels on world markets to “stabilise”, easing pressure on crumbling prices. This is not the first such comment made by a GCC official, however, no action has yet materialized. Kuwait’s OPEC governor, Naval al-Fezaia made similar comments back in January.
“The market will oblige all (producers) not to reduce but to stabilise their output levels,” Mazrouei told satellite news channel Sky News Arabia.
He expected world demand for crude to rise this year by 1.3 million barrels per day (bpd) and also said it was “possible” that supplies from non-Opec producers fall by 500,000 bpd. Producers could fall short of the 1.8 million bpd gap because “several countries have suspended investments” needed to boost output capacity, the minister said.
Mazrouei said he was “optimistic over a return of stability” on the market, without specifying what action the OPEC cartel or its members would take. There might be no action at all despite that all of the GCC oil exporting countries face hardship due to the low oil prices.
Elsewhere, a six percent drop in US crude oil drilling activity reported by Baker Hughes had also reinforced such sentiment. In addition, US rig count fell by 28 to 439 last week, as low as it was in 2010. Apparently, lower crude oil production should be expected.