NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher this afternoon on a follow-through short covering rally amid growing expectation the Organization of Petroleum Exporting Countries would soon take action to stabilize prices following Thursday's bullish comment by Saudi Arabian oil ministers.
"It is continued short-covering on the back of the Saudi oil minister comments," said analyst Andy Lipow, president of Lipow Oil Associates in Houston.
"There were a lot of people who were short and they rushed to buy back oil contracts," added analyst Phil Flynn at Price Futures in Chicago.
NYMEX September West Texas Intermediate crude futures settled $1.0 higher at $44.49 per barrel (bbl), off a three-week high of $44.60 and up $2.69 or 6.4% for the week. October Brent crude oil futures on the IntercontinentalExchange settled 93 cents higher at $46.97 bbl, off a three-week spot high of $47.05 and up $2.72, or 6.1%, for the week.
NYMEX September ULSD futures settled up 2.37 cents to $1.4086 gallon, off a three-week high of $1.4115 and up 9.16 cents, or 7%, for the week. NYMEX September RBOB futures contract was the weakest of the complex, settling 0.92 cent higher at $1.3709 gallon, near a four-day high of $1.3791 while down fractionally for the week.
The futures complex was off to a weak start and had been trading mixed until midday when prices came off after oil services firm Bakers Hughes reported the number of rigs drilling for oil and gas in the United States increased for a seventh straight week, with the number of active oil rigs up 15 at 396.
The Baker Hughes report showed rigs down 403 versus the comparable week in 2015, and active drilling units 276 lower on a year-over-year basis.
The Baker Hughes report was overshadowed by the Saudi comments earlier in the week.
On Monday, Aug. 8, OPEC President Mohammad bin Saleh al-Sada said OPEC nations plan to have an informal meeting on the sidelines of the International Energy Forum's conference set for Sept. 26-28 in Algeria. Analysts were doubtful however, citing OPEC's history is riddled with market talk that proves all sizzle and no steak.
However, when Saudi Energy Minister Khalid al-Falih on Thursday said OPEC and non-OPEC members would discuss the market conditions and any action that may be required to stabilize prices the market will be considered. OPEC has its regularly scheduled biannual summit in Vienna on Nov. 30, so a deal to act would have to come at or before then.
Oil futures' upside this week was also underpinned by OPEC raising its global demand estimate and by a weakening dollar.
George Orwel can be reached at firstname.lastname@example.org
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