Crude prices have roared back to enter a bull market this week, rallying more than 20 percent from lows earlier this month amid hopes an upcoming OPEC meeting might stabilize global oversupply.
Global oil prices continued their upward trend in early trading on Friday, with North Sea Brent crude holding firmly above $50 (44 euros) a barrel, and US benchmark WTI for delivery in September en route to a six-week high.
Technically, prices have entered a bull market as they have gained more than 20 percent since lows of below $40 earlier this month, fuelled mainly by official data showing lower US stockpiles and hints of a possible production freeze at the Organization of Petroleum Exporting Countries (OPEC).
OPEC members and their competitors outside the cartel are to meet informally next month in Algeria, and there have been hints their talks could include ways to stabilize the market hit by global oversupply.
Moreover, US government data showed the country's stockpiles fell by 2.5 million barrels and gasoline stocks by 2.7 million barrels in the week to August 12, indicating robust demand in the world's top oil consumer. A sliding US dollar has also encouraged demand by making the dollar-traded commodity cheaper.
There has been speculation this week that OPEC leader Saudi Arabia and non-OPEC member Russia might cooperate on stabilizing the oil price ahead of September's meeting.
But doubts remain if an output freeze will be reached, given Iran's ongoing resistance to such a deal, which has already led to the failure of talks in April. Iran has said it will continue ramping up production, which has been hit by years of Western economic sanctions that were lifted only in January.
Angus Nicholson, a Melbourne-based analyst with IG Markets, believes though, that Iran's resistance "means little when the oil price has such strong upwards momentum." Speaking to the news agency AFP, he also pointed to figures by the industry group American Petroleum Institute showing that US consumption of gasoline reached record levels in July.
But EY Services oil and gas head Sanjeev Gupta told the same news agency that the oil market would continue to "seesaw amid skepticism over the coordinated efforts to stabilise output."
uhe/kd (AFP, Reuters)