Oil in Bull Market Heads for Biggest Weekly Gain Since April

Oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output as U.S. crude and fuel stockpiles decline.

Futures were little changed in New York, erasing an earlier gain of 1.1 percent, yet still poised for weekly increase of 8.5 percent. While OPEC is unlikely to take action that changes market conditions, its plans to hold informal talks in Algiers next month “were the spark” behind oil’s rally, according to Morgan Stanley. U.S. crude inventories dropped the most in five weeks through Aug. 12, while fuel stockpiles slid a third week, Energy Information Administration data showed Wednesday.

Oil has climbed more than 20 percent to enter a bull market, less than three weeks after it tumbled into a bear market. Russian Energy Minister Alexander Novak said that the nation was open to discussing a freeze after Saudi Arabian Energy Minister Khalid Al-Falih said that informal talks in September may lead to action to stabilize the market. A deal to cap production was proposed in February but a meeting in April ended with no accord.

“Oil prices continue the upward trend on upcoming freeze-deal talks,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “The increase based on freeze-deal expectations is, however, fragile as the last freeze-deal talks resulted in no deal.”

West Texas Intermediate for September delivery was 4 cents higher at $48.26 a barrel on the New York Mercantile Exchange at 11:21 a.m. in London. The contract rose 3.1 percent to close at $48.22 on Thursday, capping an almost 16 percent advance over the previous six sessions. Total volume traded was 35 percent above the 100-day average.

Brent for October settlement slipped 8 cents, or 0.2 percent, to $50.81 a barrel on the London-based ICE Futures Europe exchange. The contract advanced $1.04 to close at $50.89 on Thursday, also entering a bull market after climbing more than 20 percent from its early-August low. Prices are up 8.2 percent this week. The global benchmark crude traded at a $1.85 premium to WTI for October.

An agreement to freeze output is within reach as Saudi Arabia, Iran and non-OPEC member Russia are producing at, or close to, maximum capacity, Chakib Khelil, former OPEC president and Algerian energy minister, said in a Bloomberg Television interview on Aug. 17. Iranian Oil Minister Bijan Namdar Zanganeh hasn’t decided yet whether to participate in the talks in Algiers next month, a spokesman said on Aug. 16.

Back To Top
×Close search