BY BARANI KRISHNAN
NEW YORK: U.S. crude prices jumped 12 percent on Friday after a report once again suggested OPEC might resort to a production cut to reduce the world glut, and resilient stock markets and the euro added to the risk appetite in oil.
The about-turn came after one of the most volatile weeks for oil, with prices initially falling nearly 14 percent over a four-day stretch before springing back higher.
The United Arab Emigrates' energy minister said the Organization of the Petroleum Exporting Countries was willing to cooperate on an output cut, the Wall Street Journal reported after Thursday's settlement in U.S. and Brent crude futures. He also said cheap oil was forcing supply reductions that would help rebalance the market.
The UAE's comments, coming after vain efforts earlier in the week by Venezuela and Russia to stir Saudi Arabia and other major producers into agreeing to output cuts, was initially greeted with skepticism by many traders.
But after a 75 percent price slump since mid-2014 that has taken crude prices to more than 12-year lows, many were also inclined to believe that a rebound was due sooner or later if production tightens or demand picks up.
"We expect declining U.S. oil production, in particular, to drive the oil price back up to $50 per barrel by the end of the year," Frankfurt-based Commerzbank said in a note.
U.S. crude CLc1 was up $3.10 at $29.31 per barrel by 11:38 a.m. EST. Just on Thursday, it settled down $1.24, falling to a 12-year low of $26.05.
Brent crude was up $2.72 at $32.78 a barrel, after sliding below $30 in the previous session.
Also spurring oil on Friday was a three-month high in the euro and the largest gain so far this month in U.S. stocks.
Some also said fewer players were chancing on having a short position in crude ahead of Monday's President Day's holiday in the United States, which made it a longer weekend break for the New York crude market.
Even so, some traders, like Tariq Zahir at New York's Tyche Capital Advisors, were looking forward to profit again from bearish bets once the rally peaks. "It gives me great opportunity to put out new shorts in crude spreads."
"It's not a one-way price movement anymore" in oil, said ABN AMRO's senior energy economist Hans van Cleef said. "We will see a period of high volatility".
REUTERS
