Oil prices rally on reported Russian moves

5th October 2015, Comments 0 comments

Oil prices rallied on Monday amid reports that key producer Russia was willing to discuss the global supply glut situation that has been weighing on the market, analysts said.

US benchmark West Texas Intermediate for delivery in November won $1.11 to $46.65 a barrel compared with Friday's close.

Brent North Sea crude for November delivery jumped $1.38 to stand at $49.51 a barrel in late London deals.

Crude futures were "supported by a softer US dollar and talks that Russia is ready to meet OPEC and non-OPEC crude oil producers in order to discuss the market", said Myrto Sokou, senior analyst at Sucden Financial Research.

"The news provided strong upside momentum in the oil market, as Russia has been thus far unwilling to cut oil production and cooperate with the OPEC members in order to support the current low crude oil prices," she said in a note to clients.

Russia is among the world's top oil producers alongside OPEC kingpin Saudi Arabia and the United States.

Oil prices have won some support also from data ahead of the weekend that showed the number of active rigs in the United States fell to a five-year low of 614 last week.

"Falling US oil rigs suggest that we could see more US production cuts, which could ease the over-supply issue," said Bernard Aw, market strategist at traders IG Markets.

Crude has additionally been helped by a softer dollar triggered by official data last Friday showing that jobs growth in the world's biggest economy and top oil consumer faltered in September.

This stoked concerns about demand for oil when growth in China, the world's number two economy and major energy consumer, is slowing.

"The soft US payroll report raised expectations that the Fed will push back its rate hike further," Aw told AFP.

The US economy added a disappointing 142,000 jobs during the month, well below analyst estimates, and the August jobs data was revised sharply lower to 136,000.

Analysts said the soft numbers could prompt the US central bank to push back its first interest rate hike in almost a decade, already delayed by China-driven turmoil in global financial markets.

Markets had predicted the Federal Reserve would raise interest rates by December after policymakers held back during a meeting in September.

An interest rate rise would potentially drive up the greenback against other currencies, denting demand for dollar-denominated oil as it becomes more expensive for international buyers.


© 2015 AFP

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