Investing.com -- Crude futures surged nearly 7% to reach fresh two-week highs on Friday, amid renewed hopes from top Kuwait officials that a comprehensive OPEC-Non OPEC production freeze can be completed without cooperation from Iran.
On the New York Mercantile Exchange, WTI crude for May delivery traded in a broad range between $37.46 and $39.84 a barrel, before settling at $39.75, up 2.49 or 6.65% on the session. It marked the second time this week that U.S. crude futures soared more than 5% in a single session. On Wednesday, WTI crude jumped more than $1 a barrel following reports of a significant draw in U.S. crude stockpiles last week. On the Intercontinental Exchange (ICE), brent crude for June delivery wavered between $39.63 and $42.00 a barrel, before closing at $41.92, up 2.49 or 6.25% on the trading day.
Both the international and U.S. domestic benchmarks of crude are down fractionally since hitting three-month highs in late-March.
Crude soared in overnight trading after Kuwait OPEC governor Nawal al-Fezaia predicted that a host of major producers will have few alternatives to freezing output when they meet at a highly-anticipated summit on April 17, due to persistently low oil prices. The discussions could be aimed at capping output at February levels and setting a floor for oil prices to limit further declines, Al-Fezaia suggested.
Oil prices have recovered nearly 40% since hitting 13-years lows in mid-February after Saudi Arabia, Russia and two other OPEC producers agreed in principle to limit production at January levels. Separately, Russian officials told Reuters earlier this week that they are working closely with OPEC to discuss the parameters of a production freeze and they are "on track" to reach an agreement.
"Oil producers have no option but to freeze their production as oil prices are low and hurting everyone," Al-Fezaia told Bloomberg. "All early signs before the meeting point to this conclusion."
In addition, the Kuwait OPEC governor emphasized that a comprehensive production freeze between the parties can be accomplished without the support of Iran, which has resisted such an accord as it attempts to ramp up output to 2007 pre-sanction levels. Last week, oil prices fell sharply after Saudi Arabia deputy crown prince Mohammed Bin Salman insisted that the kingdom will resist any agreement to cap its output unless the pact is also signed by their Iranian rivals. Investors on Friday mostly shrugged off reports from Bloomberg that Iran will sell its Forozan Blend crude to countries in Asia at a discount to its Saudi counterparts for a third consecutive month in an effort to dominate market share.
Despite the recent upswing, oil prices are down sharply from their peak of $115 a barrel in June, 2014, amid a glut of excessive supply on global energy markets. Crude futures have also fallen by more than 40% from their level 17 months ago when OPEC rattled markets with a strategic decision to maintain its production level at 30 million barrels per day.
Elsewhere, oil pared some of its gains early Friday afternoon after Baker Hughes said U.S. oil rigs fell by eight last week to 354, its lowest level since November, 2009. The total U.S. rig count decreased by seven to 443, falling to fresh 41-year lows. Any reductions in U.S. rig counts provide lagging indications that domestic production is about to level off. Last week, U.S. output fell to near 9.0 million barrels per day, its lowest level since November, 2014.
The declines, however, were short-lived as crude closed on Friday near session-highs.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.30% to an intraday low of 94.09, before rallying slightly to 94.23 in U.S. afternoon trading. The index remains near five-month lows.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.