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WTI Crude price for front-month delivery jumped above US$50 per barrel on Friday morning for the first time in more than three weeks after reports suggested earlier in the day that OPEC could be considering deeper cuts in its attempt to lift the price of oil and help draw down bloated inventories that have been weighing on prices.
As of 10:40am EDT on Friday, WTI Crude was surging 2.19 percent at US$50.43, while Brent Crude was up 2.15 percent at US$53.64.
Earlier today, Reuters reported that an OPEC panel tasked to discuss options for the cartel cuts extension ahead of next week’s meeting in Vienna is studying deeper cuts. Nothing has been decided yet, but deeper cuts are on the table of discussions, depending on estimates of how fast and how much non-OPEC producers, most notably the U.S., would raise supply, according to an OPEC source who talked to Reuters.
Following the initial OPEC deal announcement in November, oil prices jumped and remained steady for the most of the first quarter this year. But as it was becoming increasingly obvious that OPEC’s cuts are not working fast enough and U.S. shale is roaring back to production growth, investor enthusiasm waned. Record breaking U.S. inventory figures in the first quarter were also weighing on the oil prices.
But the EIA has lately reported weekly draws in inventories. On Wednesday, oil prices were boosted by the EIA reporting a fresh draw in crude oil inventories for the week to May 12, at 1.8 million barrels.
On Thursday, oil erased early losses and rebounded after Algeria’s Energy Minister Noureddine Boutarfa said that most OPEC producers are supporting the Saudi-Russian proposal for an extension of the production cuts until March 2018.
With today’s rally, oil prices are set to close a second week of gains, after volatile trade in most of March and April that had pushed the WTI consistently below US$50 for more than three weeks.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.