Oil Finishes With Record Weekly Gain Of 37% As Trump Touts Output Cuts

Oil Finishes With Record Weekly Gain of 37% as Trump Touts Output Cuts

Crude prices jumped as much as 14 percent and gained a record 37 percent on the week, responding to suggestions by US President Donald Trump that world oil producers were ready to resume stalled production cuts

NEW YORK (Pakistan Point News / Sputnik - 04th April, 2020) Crude prices jumped as much as 14 percent and gained a record 37 percent on the week, responding to suggestions by US President Donald Trump that world oil producers were ready to resume stalled production cuts.

The market was also supported by data showing the US oil rig count had fallen by 62 this week, the most for a week in five years.

The falling rig count was evidence that drillers in prolific US shale oil patches, blamed for flooding the market for years with more crude than necessary, were already paring output. Oil drillers and regulators in Texas, the state that produces the most oil in the United States, have said lately they were keen to join global producers in cutting supply.

Oil prices also caught a bid on Friday after the Kremlin said President Vladimir Putin was to meet Russian energy industry executives and officials on Friday to discuss the global market situation.

Brent, global benchmark for crude traded in London, settled Friday's trade up $4.717, or 14 percent, at $34.11 per barrel. For the week, Brent rose 37 percent.

West Texas Intermediate, the benchmark for US crude traded in New York, settled Friday's trade up $3.02, or 12 percent, at $28.34 per barrel. On Monday, the US crude benchmark hit 18-year lows of $19.27. It ended the week up 32 percent after the two-day rally.

Trump tweeted on Thursday that he had spoken to Saudi Arabia's Crown Prince Mohammad bin Salman and President Putin of Russia and understood from conversations between the two leaders that global oil producers could resume cuts that would take between 10 million and 15 million barrels away from daily output, estimated at 100 million barrels.

Coordinated Saudi-Russian cuts since 2016 under the OPEC+ initiative ended in early March after Russia's refusal to participate in a pact that it deemed to be largely serving US shale drillers who did not contribute a single barrel to cuts or market rebalancing.

Since the collapse of the OPEC+ initiative, the Saudis have, however, ramped up their production by an estimated 30 percent and also began offering their crude at rock-bottom prices to poach markets held by Russian and US crude exporters. The Saudi strategy has backfired to an extent as demand for oil collapsed in recent weeks from the worldwide shut down of economic and social activity by authorities trying to prevent the spread of the novel coronavirus (COVID-19) pandemic.

Wall Street bank Goldman Sachs recently estimated that the world oil market was oversupplied by around 20 million barrels per day as a result of the demand destruction caused by the pandemic and ill-timed production hikes by Saudi Arabia.