Oil prices rise: Markets react positively to confidence production cuts will be extended

Oliver Gill
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US production data has raised concerns from some parties that the country is stockpiling oil (Source: Getty)

Oil prices hit one month-highs overnight after hopes were raised large oil producing states will extend caps on output.

Brent crude futures were up 0.7 per cent, or 34 cents, to $52.85 a barrel just before sunrise in the UK. This means prices are on track for a four per cent weekly rise.

Across the pond US crude was up 38 cents, a 0.8 per cent rise, to $49.73 a barrel.

Read more: Sigh of relief: Brent surpasses $50 and keeps rising

Oil price volatility has been marked since March as opinion has been divided over the impact of contrasting strategies by oil producing countries.

US stock data has indicated an increase in output, at odds with the production cuts agreed by the Organisation of Petroleum Exporting Countries (Opec) plus other countries.

However, confidence has grown that Opec, plus a number of other large producers including Russia, will extend those production cuts of 1.8m barrels a day until the end of March 2018.

Next Thursday Opec leaders will meet in Vienna to discuss production plans.

The chief executive of Russia's largest oil producer, Rosneft, said on Thursday the company will honour production cuts made by Opec.

Read more: Rosneft agrees to a deal with the NOC to increase Libyan oil production

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