Oil snapped four days of declines as Vladimir Putin said he’d like Russia and OPEC to reach an oil output freeze apart from Iran.
Futures gained 3 percent in New York. The Russian president said in an interview that he may recommend completing the plan when he meets with Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman at the Group of 20 summit in China next week. A freeze should exclude Iran until that country raises production to pre-sanctions levels, he said. OPEC’s crude output rose to a record in August, climbing by 120,000 barrels a day. Payrolls in the U.S. rose less than expected in August, according to government data on Friday.
Oil climbed 7.5 percent in August amid speculation that talks in Algiers at the end of September may lead to an agreement to stabilize the oil market. A cap on production would be positive, Saudi Arabia’s Energy Minister Khalid Al-Falih said in an interview last week, though he ruled out an output cut. A freeze deal between members of the Organization of Petroleum Exporting Countries and other producers was proposed in February, but a meeting in Doha in April ended with no final accord.
“This is another strong sign that the odds of a production freeze are going up,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. “My sense is that we are very close to a deal because the major players seem to be on board with it.”
West Texas Intermediate for October delivery rose by $1.28 to settle at $44.44 a barrel on the New York Mercantile Exchange. WTI posted a 6.7 percent decline this week.
Brent for November settlement climbed $1.38, or 3 percent, to end the session at $46.83 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $1.79 premium to November WTI.
“From the viewpoint of economic sense and logic, then it would be correct to find some sort of compromise,” Putin said in an interview in Vladivostok. “I am confident that everyone understands that. We believe that this is the right decision for world energy.”
Other producers are coming to the view that freezing production is right, Saudi Arabia’s Foreign Minister Adel Al-Jubeir said in Tokyo on Friday, adding that he’s optimistic a deal is possible in Algiers.
“We are at a war of words right now between a number of different producing regions. That can really drive the market anywhere based on the rhetoric coming out of these countries,” Michael Tran, a commodities strategist at RBC Capital Markets in New York, said by telephone. “It’s strap-on-your-seat belts for the next several weeks because we’re going to probably see some choppy markets.”
Payrolls climbed by 151,000 in August in the U.S. following a 275,000 gain in July that was larger than previously estimated, a Labor Department report showed. The median forecast in a Bloomberg survey called for 180,000. The dollar initially weakened following the report, bolstering the appeal of commodities priced in dollars as an investment.
OPEC’s crude production rose to a record in August as increased output from Gulf members made up for persisting losses in Nigeria and Libya, according to a Bloomberg survey. Supplies from the Organization of Petroleum Exporting Countries climbed by 120,000 barrels a day to average 33.69 million a day in August amid increases by Iran, Iraq and Kuwait, the survey of analysts, oil companies and ship-tracking data showed.