Essam Al-Sudani | Reuters
People work at the Halfaya oilfield in Amara, southeast of Baghdad, Iraq.
Analysts say oil prices are approaching breakout levels, and the final day of trading this week will offer clues about whether crude futures can keep rallying.
Brent crude on Friday topped $65 a barrel for the first time this year, hitting a nearly three-month high. The international benchmark for oil prices was pushing toward $66 around 9:45 a.m. ET.
Meanwhile, U.S. West Texas Intermediate crude popped above $55, and was threatening to take out last week’s 2½-month high at $55.75.
The main catalyst for the bullish run is a sharp pullback in OPEC’s output at the start of a six-month production-cutting deal, which was bolstered by top exporter Saudi Arabia’s pledge to pump well below its quota. This week, Saudi Energy Minister Khalid al-Falih said the kingdom plans to produce 9.8 million barrels a day in March, about half a million barrels below levels the Saudis agreed to and down from 11.1 million bpd in November.
That is finally helping oil prices push through resistance built on forecasts for slowing demand and concerns about a sluggish global economy as the U.S.-China trade dispute remains unresolved.
“Oil has previously struggled during previous periods of risk aversion but, like its fellow commodities, is fond of a weaker dollar and is continuing to respond to favourable reports this week,” Craig Erlam, senior market analyst at brokerage OANDA, wrote in a morning market briefing.
“Brent and WTI are both now seriously testing a major resistance zone, around $65 and $55, respectively, the break of which could be the catalyst for another rally.”
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