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Oil jumps 12.3% on hopes of production cuts

February 12, 2016 2:55 PM
James Rose

 
WTI crude prices jumped as much as 13 percent on Friday after a report from the Wall Street Journal suggested OPEC might finally agree to cut production.

Despite the gain, oil prices were poised to end the week down with significant losses. But WTI settled up more than 12 percent, for the best one-day gain since February 2009, when WTI gained 14 percent.

It was a rally from a 13-year low the previous day.

WTI for March delivery settled up $3.23, or 12.3%, to $29.44 a barrel on the New York Mercantile Exchange.

Brent, the global benchmark, gained $3.02, or 10.1%, to $33.08 a barrel on ICE Futures Europe.

Oil prices had already been higher but pushed to larger gains after the Baker Hughes weekly survey showed that U.S. weekly oil rigs had declined by 28 rigs to 439.

US crude fell to $26.21 on Thursday, the lowest since 2003. Both Brent and WTI are still down for the week, with Brent on track for a 7% loss and WTI down around 10%.

Prices have been rising since late trading on Thursday after The Wall Street Journal posted translated comments from the United Arab Emirates’ energy minister about whether OPEC members are more open to cutting output. The minister said they are “ready to cooperate,” though he also said other countries must participate, too. That has yet to happen, despite increasing talk of it in recent month.

However there are still many that continue to be skeptical about the chances of any agreement.

“We view this as further jawboning, with the likelihood of a coordinated response on supply cuts very low,” ANZ Bank said in a report.

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