Oil market ends turbulent month with tick higher

Photo illustration of an oil derrick. (Photo: AFP/Spencer Platt)

NEW YORK: The oil market scored modest gains on Friday (Jan 29), ending a turbulent January that drove prices sharply lower amid worries about the global crude oversupply.

Speculation that Russia and the Organization of the Petroleum Exporting Countries will meet to discuss oil output cuts to push up prices supported sentiment for a second day, analysts said.

US benchmark West Texas Intermediate for delivery in March rose 40 cents to US$33.62 a barrel on the New York Mercantile Exchange, after advancing almost US$3 over the three prior trading sessions.

In London, Brent North Sea for March finished at US$34.74, adding 85 cents from Thursday's settlement and about US$2.50 over the week.

The oil market managed a second straight week of advances after having sunk to 12-year lows early this month.

Despite those gains, WTI finished the month down about nine per cent and Brent nearly seven per cent.

Mike Lynch of Strategic Energy and Economic Research said there was "no strong reason" for Friday's lift in prices.

"The talk of Russia and OPEC maybe meeting and working out a production cut has made people think we've reached a bottom and it's time to buy back in the market," Lynch said.

According to Russian news agency reports Thursday, Energy Minister Alexander Novak said Moscow is ready to discuss "coordinating" with OPEC and mutual production cuts of up to five per cent.

The news though drew scepticism that such a meeting or agreement would take place.

Novak "said they had been approached by Venezuela about a potential meeting but that was the extent of it, while senior OPEC delegates were dismissive," said Matt Smith of ClipperData.

But Price Futures Group analyst Phil Flynn said the mere talk of a Russia-OPEC meeting was shifting sentiment higher.

"OPEC summit talk is being denied a little bit," Flynn said. But in the market there remains "at least a ray of hope they could get together on a production cut. And that hope is just enough to give the market a boost."

Meanwhile the number of active oil drilling rigs in the United States fell by 12 this week to 498, compared with 1,223 a year ago.

The plunge in the market also was reflected by Chevron. The second-largest US oil company reported on Friday a US$588 million loss in the fourth quarter, its first loss since 2002.