By Biman Mukherji
Oil futures rose Friday in Asia, building on overnight gains in the U.S., as investors showed some optimism about what will come out of next week's meeting of the Organization of Petroleum Exporting Countries.
Up for final discussion there is whether to extend the current six-month production-cut deal beyond the mid-2017 expiration, and if so for how long and whether the reductions should be increased.
It is widely expected an extension will occur, and energy officials from Saudi Arabia and Russia this week signaled they back a nine-month extension. That helped give oil a start-of-week gain that's been built on since, putting crude on pace to modestly top the 3.5% jump logged last week.
After settling Thursday at three-week highs, light, sweet crude futures for delivery in June on the New York Mercantile Exchange were recently up 0.8% at $49.73 a barrel in the Globex electronic session. July Brent crude on London's ICE Futures exchange gained 0.7% to $52.90.
Li Li, energy research director at ICIS China, attributed Friday's advance to pre-meeting optimism, and she anticipates prices being "slightly higher [until] the end of the month...I don't expect prices to jump hugely from the current trading range."
Though investors aren't liable to make big bets ahead of the meeting, oil could get a kick later Friday when Baker Hughes' weekly U.S. rig-count data are released. That report has shown 17-straight weeks of growth in active oil-drilling rigs.
But government figures on Wednesday showed the first week-to-week drop in domestic oil production since February, a development which also helped lift crude prices this week and get light, sweet crude back toward $50. West Texas Intermediate hasn't traded at that level in nearly a month.
To some, the past two weeks' price rebound was to be expected after April's slide. That drop "was a case of sentiment over substance," said BMI Research. It sees more price gains to come the next several months, but they "are more likely to be incremental rather than exponential."
As for oil products, Nymex June gasoline futures were recently up 0.4% at $1.6125 a gallon, diesel rose 0.7% to $1.5560 and ICE gasoil gained 0.5% to $467.50 per metric ton.
Write to Biman Mukherji at [email protected]