Oil prices surge, but investors cautious about Russian output

Oil prices

Oil prices rose in trading on Friday, erasing Thursday’s losses. Anadarko photo.

Oil prices rise after three-day decline

Oil prices surged in trading on Friday after a three day decline.  The gains erased Thursday’s losses, but investors are concerned about Russian production figures showed Moscow is not complying fully with its OPEC supply cut pact commitments.

Russia’s oil output in February was unchanged from January at 11.11 million b/d, according to data released by the energy ministry.  Russian production cuts remained at 100,000 b/d, or one-third of what was agreed upon in the November, 2016 OPEC supply cut agreement.

OPEC member compliance with the six-month deal is at 94 per cent.

Brent rose 52 cents to $55.60/barrel and WTI futures rose 59 cents to $53.20/barrel, a 1 per cent gain.

The US dollar, down 0.3 per cent dropped from a seven-week high ahead of a key speech by Federal Reserve chief Janet Yellen.  Recently, expectations that the Fed will raise interest rates at the close of its two-day meeting on March 15, boosting the greenback.

Tamas Varga, a senior analyst at London brokerage PVM Oil Associates told Reuters “There is nothing surprising in seeing fresh buying after a big sell-off and of course the slightly weaker dollar is also helping oil recover.”

A strong US dollar puts pressure on oil prices because global petroleum trade is conducted in dollars.

At mid-day on Friday, Baker Hughes will release its rig count figures.  Analysts expect the report to show that the the number of rigs in the US continues to rise.

 

 

 

Posted in: Energy Financial

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