Oil is gradually pulling away from the market’s lowest level in almost a decade, after U.S. data showed oil production fell to its lowest level since November 2014.
According to U.S. Department of Energy’s Energy Information Administrative, U.S output fell to 9.08 million barrels a day, while inventories rose to a new record of 517.98 million barrels last week.
Brent oil nudged up 3 cents to trade at $37.10 a barrel after moving 14 cents higher in the previous session, U.S. WTI climbed 13 cents to $34.76 during Asian trade on Friday.
Investors think the on-going talk between OPEC members, led by Saudi Arabian Oil Minister, Ali al-Naimi to reduce production is working and as such oil has gained about 18 percent to trade above $35 for the first time in two months.
“Since the Saudis and Russia reached an agreement to freeze output, volatility in the market has eased and oil prices have stabilized with the focus shifting back to fundamentals,” said Hong Sung Ki, a senior analyst at Samsung Futures Inc. “More stable oil prices are expected in the coming months, possibly up to the $40 level, at least until the next OPEC meeting in June.”
According to Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu, Key members of OPEC intend to meet with other producers in Russia this month to renew talks on the freeze deal, there will be a “dramatic price movement” when the gathering takes place, he said Thursday.
“The question is, if the deal falls through, would we see that much of a retreat in the oil price? I think we’d probably still see it staying above $30,” said Angus Nicholson, an analyst at IG Ltd. in Melbourne. “A lot of the movement higher was very much on whispers and rumors, nonetheless, it has managed to hold.”