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Monday, May 23, 2022

Oil prices rise further on output hopes

Oil prices rose further Thursday, building on a rally triggered by an agreement between Saudi Arabia and Russia to freeze output levels.

At around 1300 GMT, US benchmark West Texas Intermediate for delivery in March was up 93 cents, or 3.0 percent, at $ 31.59 a barrel.

Brent North Sea crude for April (LSE: 0N69.L – news) delivery climbed 74 cents, or 2.1 percent, to $ 35.24 a barrel compared with Wednesday’s close.

On Wednesday, WTI jumped more than seven percent while Brent added 5.6 percent.

Prices soared sharply after the announcement this week from Saudi Arabia and Russia, the world’s two biggest oil producers, to limit their crude output levels if others followed suit.

Crude futures won further support after Iran’s oil minister Bijan Zanganeh said Tehran will “support any measure that can stabilise the market and increase prices”.

Even (Taiwan OTC: 6436.TWO – news) though Iran has not committed to any curbs, comments coming out of the Islamic Republic are significant as it embarks on hiking its own output following the lifting of Western sanctions.

Traders consider the latest developments a step in the right direction, providing a welcome respite after crude flirted with 13-year low points last week.

“The short-term oil market will remain volatile, responding to the ongoing talks on output levels,” said EY analyst Sanjeev Gupta.

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