NEW YORK (DTN) -- New York Mercantile Exchange oil futures ended the week on a high note this afternoon amid technically-driven short covering as the February products contracts expired at the session close.
However, prices slipped off intraday highs after Russia dialed back earlier comments that indicated Moscow and the Organization of Petroleum Exporting Countries were discussing cutting oil production to rebalance the market, and Iran said it would not be a willing participant currently preparing for a surge of export volumes after sanctions were lifted on deal to limit nuclear growth.
Today's rally ensured the second straight week of gains for the oil futures complex, and it was further bolstered by a report from Baker Hughes saying the number of oil rigs fell by 12 during the week ended today to 498 rigs, suggesting easing domestic oil production.
At settlement, NYMEX March WTI crude futures climbed 40cts to $33.62 bbl after inside trade, up $1.43 for the week. ICE March Brent oil futures rose 85cts to $34.74 bbl, rising $2.56 for the week.
In products trade, the NYMEX February ULSD futures contract expired 2.42cts higher at $1.0551 gallon and up 5.94cts for the week. The March contract gained 3.40cts to settle at $1.0787.
The February RBOB futures contract expired 2.41cts higher at $1.1031 gallon, and up 1.92cts for the week. March contract rose 3.20cts to $1.1323 gallon at settlement.
On Wall Street, stock indices were higher by roughly 2% in a broad-based rally, with the dollar rising to a one-week high versus its peer currencies after data showed the U.S. economy slowed at the end of last year and on Japan's surprise stimulus announcement.
In a move that stunned the market, the Bank of Japan overnight set Japan's first negative interest rates in a desperate attempt to keep the economy from sliding back into stagnation. The move comes after the European Central Bank last week said it might introduce another stimulus measure in March. The U.S. Federal Reserve on Wednesday held interest rates steady.
The Fed was concerned about global slowdown and recent weak domestic data. This morning, the Bureau of Economic Analysis reported that the U.S. economy grew at an annualized 0.7% in the fourth-quarter of 2015, missing a projected 0.8% rate, and down from 2.0% for the third quarter.
Market analysts remain skeptical that a deal to cut production has much of a chance of succeeding, and Novak's latest comments suggest Russia is trying to nudge OPEC to cut output without committing itself to the move. Both Russia and Saudi Arabia have previously showed disinterest in cutting output since they were trying to maintain or maximize their market share.
The market has a surplus of about 1.5 million bpd, according to data from OPEC and the International Energy Agency and that excess is expected to increase with the addition of Iranian crude oil into the market. Tehran expects to raise output by 500,000 bpd in February, rising to 1 million bpd within six months.
George Orwel can be reached at George.email@example.com
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