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Oil futures gained ground Friday, putting crude on track for its first weekly rise in six weeks.
West Texas Intermediate crude for March delivery CLH20, +1.34% rose 68 cents, or 1.3%, to $52.10 a barrel, while April Brent crude BRNJ20, +1.42% was 71 cents higher at $57.05 a barrel, a gain of 1.3%. WTI, the U.S. benchmark, was on track for a 3.5% weekly rise, while Brent, the global benchmark, was set for a 4.8% weekly rise. It would mark the first weekly gain for both grades since the week ended Jan. 3., according to FactSet.
Analysts said oil, which slumped into a bear market last week, found its footing on ideas the Organization of the Petroleum Exporting Countries and its allies, particularly Russia, could agree to a plan to further curb production in response to demand fears sparked by the spread of COVID-19 in China. But analysts noted that uncertainty remained over the spread of the disease and its potential impact on demand.
“The OPEC+ technical committee’s recommendation to cut supply by a further 600,000 barrels a day would help if Russia signs on, and Nigeria joins Libya in experiencing conflict disruption to production,” said Jason Gammel, analyst at Jefferies, in a note. “Still, Chinese demand expectations remain the dominant factor for crude prices and the severity and duration of the coronavirus effects remain a guessing game.”
China on Friday said 121 more people had died from COVID-19, the disease caused by a coronavirus that emerged in Wuhan in late 2019, over the previous 24 hours, bringing the total to 1,381. The country’s National Health Commission reported 5,090 new confirmed cases in mainland China, bringing the total to 63,851. The number of new cases jumped sharply on Thursday after a change in the government’s counting method.
Russia remains the wild card when it comes to agreeing to further production curbs by OPEC+, analysts said.
Kremlin officials insist that President Vladimir Putin hasn’t made up his mind on the recommendation by an OPEC+ joint technical committee for OPEC and its allies to reduce output by 600,000 barrels a day, noted Helima Croft, head of global commodity strategy at RBC Capital Markets, in a note.
At the same time, Russian energy companies continue to balk at deeper cuts while signaling a willingness to extend the current agreement on output curbs, which are set to end in March, through the second quarter, she noted.
“We see this as largely in keeping with past practice and that Putin will once again overrule his energy executives at the 11th hour and sign on the dotted line when the ministers meet on March 5 — though this public hand-wringing may be effectively deployed in the negotiations to reduce Russia’s overall output obligations,” Croft said.
In other energy trading, March gasoline RBH20, +0.61% rose 0.6% to $1.5891 a gallon, while March heating oil HOH20, +0.14% was 0.1% higher at $1.6826 a gallon.
March natural-gas futures NGH20, -0.55% were off 0.4% at $1.819 per million British thermal units.
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