Brent crude oil prices rose above $51 a barrel on Friday to hit an eight-week high and was on track to rise for a seventh trading day, as hopes that producers could agree measures to support crude buoyed sentiment.
International benchmark Brent crude oil futures were trading at $51.15 per barrel in early trading, up 26 cents from their last close. Brent prices remain in a bull run that has lifted the market by more than 20 per cent since early August. Brent earlier hit $51.20.
US West Texas Intermediate (WTI) crude futures were at $48.67 a barrel, up 45 cents.
Positive sentiment
“Oil prices climbed higher because of the US crude stocks downtrend and positive market sentiment, led by Opec talks. Oil ETFs [exchange-traded funds] and managed money also continued to bet on the oil rise recently,” a Hong Kong-based trader said.
Nigeria’s oil minister, Emmanuel Ibe Kachikwu, said on Thursday that while a cut in Organisation of the Petroleum Exporting Countries (Opec) production was unlikely, there was hope a meeting of producers in Algeria next month could help shore up crude prices.
US crude was also pushed up by an open arbitrage opportunity to export WTI to Europe, leading to a rush of new orders.
However, analysts and traders warned the rally was overblown, especially since planned talks between Opec and other major producers such as Russia to rein in ballooning overproduction were unlikely to lead to a reduced supply overhang.
“Some believe – or more appropriately, hope – that the Opec may come up with a plan to support prices at its informal meeting next month, something which we doubt will happen,” said Fawad Razaqzada, a market analyst at Forex.com.
The market appeared to be approaching overbought territory, a Singapore-based trader said.
"Prices could potentially rise another $1 to $2 a barrel before they fall, but the market will need a catalyst to spark the sell-off," the trader said. – (Reuters)
