Oil rose the most in two months as U.S. crude production continued to slide before talks between suppliers to discuss freezing output.
West Texas Intermediate for May delivery advanced $2.46 to close at $39.72 a barrel at on the New York Mercantile Exchange.
It’s the biggest gain since Feb. 12. Prices climbed 8 percent this week. Total volume traded was 58 percent above the 100-day average at 2:53 p.m.
U.S. output slid for the 10th time in 11 weeks through April 1, and crude stockpiles fell, according to data from the Energy Information Administration on Wednesday.
The number of active oil rigs in the U.S. dropped to the lowest level since 2009 this week, Baker Hughes Inc. data show. Major producers from Saudi Arabia to Russia will meet in Doha on April 17 to discuss freezing output in a bid to stabilize prices.
“There’s a lot of nervousness about the April 17 meeting and what it will mean for the market,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “We’re still hemmed in a range below $40. Breaking through would be very bullish for the market.”
Crude slid to the lowest level in almost 13 years in February before rebounding on signs a global glut will ease. Prices have whipsawed this week amid speculation over whether an accord to cap output can be reached. Saudi Arabia said it will only agree to a freeze if it’s joined by other suppliers including Iran, while Kuwait said a deal can be done without Tehran’s support.
Brent for June settlement rose $2.51, or 6.4 percent, to $41.94 a barrel on the London-based ICE Futures Europe exchange. The front-month contract closed at an 8-cent discount to the second-month. The global benchmark oil closed at a 95-cent premium to June WTI.
“Prices just flop back and forth,” said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. “The market is extremely psychotic, subject to sharp reversals on inconsequential information.”
Russia is seeking a successful result from the Doha meeting, Energy Minister Alexander Novak told reporters in Moscow Friday, adding that countries are discussing a freeze of oil production at January levels.
Russian oil and condensate production will rise through 2017, even as the nation prepares for the talks, according to Goldman Sachs Group Inc.
Global oil producers won’t discuss output cuts at the Doha meeting, Ecuadorean Oil Minister Carlos Pareja said at a meeting of Latin American ministers in Quito, Ecuador.
“I’m not buying this rally,” said Stewart Glickman, an equity analyst at S&P Capital IQ in New York. “We went from $26 to $41 on optimism that something will happen to curb supply. The risks of a sharp downturn remain greater than those for a rally.”
