WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied Thursday, with West Texas Intermediate breaking above $25 barrel (bbl) and Brent just below $30 bbl after Saudi Arabia called for an emergency meeting between members of the Organization of Petroleum Exporting Countries and Russia-led producers, reigniting hopes the group would work out a new deal reducing crude supplies.
On the session, May WTI futures rallied $5.01 to close at $25.31 bbl and front-month ICE Brent June contract advanced $5.20 to a two-week spot high $29.94 bbl settlement. NYMEX RBOB May contract climbed 11.63 cents to $0.6628 gallon and front-month ULSD May futures clawed back 6.28 cents to settle at $0.9951 gallon.
Thursday's trade session sent oil prices decisively higher after U.S. President Donald Trump suggested Saudi Arabia and Russia were getting closer to reaching a new deal after Riyadh and Moscow failed to reach consensus in early March that led to Saudi Arabia declaring a war for market share by opening its oil spigots and Russia following suit with plans to hike output by 500,000 barrels per day (bpd).
It's unclear what will ultimately be decided, but reports indicate Saudi Arabia is willing to cut back production to below 9 million bpd, nearly 3 million bpd less than it planned to pump this month. Trump tweeted both producers "will be cutting back approximately 10 million barrels and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!"
Saudi Arabia, OPEC's de facto leader, called for an extraordinary meeting among the 24 members of the OPEC+ alliance to discuss the cuts. A date has not yet been set.
The Saudi-Russian row reached a crescendo in early March, after Saudi-led OPEC and a group of non-OPEC oil-producing countries dominated by Russia failed to agree on deepening production cuts by 1.5 million bpd.
Russia seemed to have decided it was economically unfeasible to boost oil production at a time when the market is reeling from the seismic drop in oil demand and called off an earlier pledge to lift output. Russian President Vladimir Putin on Thursday called for a new international production deal for the sake of both producers and consumers. Russia's ruble tumbled to a four-year low against the U.S. dollar in March as international crude benchmark Brent fell over 50% last month.
Coinciding with early signs of a diplomatic breakthrough, U.S. Special Representative for Venezuela Elliott Abrams, said Thursday sanctions on Russian oil company Rosneft Trading could be lifted if it is clear the company is no longer involved with Venezuela. The Trump administration sanctioned Rosneft Trading for acting as an intermediary for Venezuelan state oil company Petroleos de Venezuela, which in turn was sanctioned last year. Rosneft CEO Igor Sechin was a prominent opponent to Russia's participation in a multilateral production agreement.
Looking ahead, the market will closely watch for news from the White House meeting with heads of top U.S. oil companies scheduled for Friday to discuss policy measures aiding domestic producers. Potential measures could include mandatory curbs on some domestic shale producers, an idea first flaunted by the Texas Railroad Commission last month.
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