Oil jumps after Venezuela renews hope for output limit

A motorist filling up petrol at a pump kiosk. (Photo: AFP/Fadel Senna)

NEW YORK: Oil prices rose for a second straight day on Thursday (Feb 26), jumping after Venezuela raised hopes for a production limit that could help address the global oversupply.

The US benchmark West Texas Intermediate (WTI) for delivery in April rose 92 cents (2.9 per cent) to US$33.07 a barrel on the New York Mercantile Exchange.

In London, Brent North Sea crude for April delivery, the European benchmark, closed at US$35.29 a barrel, up 88 cents (2.6 per cent) from Wednesday's settlement.

Both contracts had traded lower earlier in the sessions. But they shot up in late trade on reports that Venezuela's oil minister, Eulogio Del Pino, said that his country was preparing to meet in March with other producers to discuss ways to stabilize the market.

Russia and OPEC members Saudi Arabia, Venezuela and Qatar announced last week a preliminary deal to freeze output at January levels, provided that other major producers followed suit. Speculation over a potential output freeze has roiled the market, with skepticism high that such a deal could be struck.

"The market continues to seesaw," said Gene McGillian of Tradition Energy. He said there is a battle between traders focused on excess supplies overhanging the market and those expecting prices to rebound as supply/demand fundamentals tighten.

Positive US economic data on Thursday helped support an improved outlook for the economy of the world's largest crude oil consumer. US durable goods orders jumped 4.9 per cent in January after two months of declines and initial unemployment claims continued to show the jobs market tightening.

"You get a tug of war between the negative impact of energy prices ... and the positive impact of economic data actually showing some glimmer of hope. What the market is trying to do is balance that," said Art Hogan of Wunderlich Securities.