Crude oil prices jumped almost 6 per cent on Friday after comments by an OPEC energy minister sparked hopes of a coordinated production cut, yet analysts said such a move remained unlikely and that oversupply would persist.
International Brent crude benchmarks were trading at $31.80 per barrel at 0139 GMT, up 5.8 per cent, or $1.74, from their last settlement.
Reuters market analyst Wang Tao said a technical analysis of Fibonacci retracements showed that “Brent is expected to test a resistance at $32.72 per barrel.”
US West Texas Intermediate (WTI) futures were at $27.73 per barrel, also up 5.8 per cent, or $1.52, from the previous day’s settlement.
WTI plumbed a new 2003 low in the previous session as domestic stockpiles grew and investors fled from equities and other risky assets into safe havens such as gold.
Friday’s jump came after the United Arab Emirates energy minister said the Organization of the Petroleum Exporting Countries (OPEC) was willing to talk with other exporters about cutting output.
OPEC members were ready to cooperate with other producers on a cut, the minister said, although he added that cheap oil was already forcing some output reductions which would help rebalance the market itself.
Yet analysts said they saw little chance of OPEC and non-OPEC producers agreeing on a common policy and that low prices as a result of oversupply would likely persist.
“Comments from the UAE energy minister that OPEC was willing to cooperate on production cuts had little impact. We view this as further jawboning, with the likelihood of a coordinated response on supply cuts very low,” ANZ bank said on Friday.
Oil prices have tumbled over 70 per cent since mid-2014 as producers pump 1-2 million barrels of crude every day in excess of demand just as global economic growth stalls, led by China’s slowdown.