Oil capped the longest run of weekly gains since May after a report showed U.S. employers added more workers than projected and government data showed crude production is declining.
Futures rose to the highest in two months, taking crude’s gains over the last three weeks to 22 percent. The U.S. added 242,000 non-farm jobs last month, the Labor Department said. U.S. crude production declined for a sixth week in the period to Feb. 26, while supplies from the Organization of Petroleum Exporting Countries fell in February because of pipeline disruptions in Iraq.
“The market is riding the wave of greater risk appetite following the release of the jobs report today,” said Harry Tchilinguirian, BNP Paribas SA’s London-based head of commodity markets strategy. “The expectation of U.S. production declining will be positive for prices.”
Oil is still down 3 percent this year on speculation a global glut will be prolonged amid brimming U.S. stockpiles and the outlook for increased exports from Iran after the removal of sanctions. OPEC members and Russia may meet to discuss capping output later this month, Nigeria’s petroleum minister said. Saudi Arabia, Russia, Qatar and Venezuela agreed on Feb. 16 in Doha that they would freeze output if other producers followed suit in an effort to tackle the oversupply.
West Texas Intermediate for April delivery rose $1.35, or 3.9 percent, to $35.92 a barrel on the New York Mercantile Exchange, the highest settlement since Jan. 5. WTI is up 9.6 percent this week.
Brent for May settlement rose $1.65, or 4.5 percent, to $38.72 a barrel on the London-based ICE Futures Europe exchange. The European global crude was at a premium of 97 cents to WTI for May.
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The February gain in U.S. payrolls followed a 172,000 rise in January that was larger than previously estimated, the Labor Department said.
While Russia confirmed its readiness to take part in the freeze talks, the time and date of the meeting is still being discussed, according to a statement on the website of the nation’s Energy Ministry. Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu didn’t specify whether Iran would attend the planned discussions.
There will be a “dramatic price movement” when the meeting takes place on March 20, Kachikwu said at a conference in Abuja, Nigeria’s capital, on Thursday. The production cap will help to balance the market and trigger a price rebound in the second half, said Daniel Yergin, vice chairman of consulting group IHS Inc.
Oil production and stockpiles remain elevated:
- Output from OPEC fell by 79,000 barrels a day to 33.06 million a day in February. Saudi output was unchanged while Iran pumped an additional 140,000 barrels a day.
- U.S. crude stockpiles expanded by 10.4 million barrels last week to 518 million barrels, the highest level since 1930, according to data from the Energy Information Administration.
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