Oil Prices Rebound As Russia Hopes OPEC Deal Will Help Price Hit $70

Yemisi Izuora 

Oil prices rose around 1 per cent on Friday to move further away from five-month lows hit earlier in the week.

This is buoyed by a report that Washington could postpone trade tariffs on Mexico and signs that OPEC and other producers may extend crude supply cuts.

Russian oil firm, Lukoil is hopeful that a outcome of a meeting in the coming weeks between OPEC and its allies to discuss its global oil deal would allow the price of oil to rise towards $70 a barrel, CEO Vagit Alekperov said on Thursday.

Speaking in St Petersburg at the start of an economic forum, the chief executive said an oil price of between $60-70 was “comfortable” and that the OPEC+ global oil deal needed to be approached very carefully. 

Meanwhile, Russian Energy Minister Alexander Novak said on Thursday that Russia is in internal discussions over its position ahead of a meeting between OPEC and its allies in the coming weeks, RIA news agency reported on Thursday.

OPEC and its allies are due to discuss extending or changing the terms of a global oil deal at meeting in Vienna scheduled for June 25/26.

Brent crude futures went up 50 cents, or 0.8 per cent, at $62.17 a barrel having risen earlier to $62.41 after gaining 1.7 per cent on Thursday. 

Also, US West Texas Intermediate, WTI, crude futures were up 50 cents, or 1 per cent, at $53.09 per barrel, after trading as high as $53.33. They finished the previous session 1.8 per cent higher. 

On Wednesday, Brent and WTI sank to their lowest levels since mid-January at $59.45 and $50.60 respectively, after US crude production hit a new record-high and stockpiles climbed to their highest since July 2017. 

By then, both contracts were in bear-market territory, having lost more than 20 per cent from peaks reached in late April. 

But on Thursday oil prices followed US stocks higher after Bloomberg News reported the United States is considering a delay in the tariffs on Mexico as talks continue.

“After prices hit the depth of the sewer this week, and are arguably in oversold territory, traders were always going to be predisposed to book profits ahead of the weekend,” Stephen Innes, managing partner at Vanguard Markets said in a morning note.

Nevertheless, sentiment on prices remains dim as fresh signs emerge of a stalling global economy and ongoing concerns about growing US crude supply.

Prices had been supported by supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and some allies including Russia. Supply has also been limited by US sanctions on oil exports from Iran and Venezuela. 

President Vladimir Putin said on Thursday that Russia had differences with OPEC over what constituted a fair price for oil, but that Moscow would take a joint decision on output at a policy meeting in coming weeks.

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