Oil prices stage a substantial rally in Asian session on Monday fueled by speculations Oil producing nations will soon freeze production on January levels.
WTI futures with April delivery trading on NYMEX surged 1.92% to $36.61/bbl. Internationally traded benchmark Brent advanced 1.94% to $39.47, meeting resistance on $39.50 level.
At the annual communist party meeting this time held in Sunday, Chinese government reported about eased goals of economic growth in next five years, downsizing the target to 6.5%. Other plans and targets were announced as well.
As the crude prices dismissed downbeat data on US crude inventories last week (10M barrels growth, versus 3M estimate) and kept rallying, its hard to say whether the growth on this week will be able to stir bearish sentiments on Oil market. Though surplus concerns yet weight on prices, they are mostly propelled by expectations of output caps discussed between Russia, Iran and OPEC cartel. Oil prices rose to 3-months high in Friday on these rumors as well as signs shale drilling slows in US.
Baker Hughes rig count report released in Friday showed the number of working rigs in US dropped from 400 to 392, contracting 11 consecutive week to the lowest level since 2009. Comparing to the October 2014 period with 1609 rigs used, current number of working rigs dropped by around 69%. The cut in rig count is often considered as as bullish signal which bodes well in easing Oil glut.
Next meeting between Oil-producing nations where output cap will be discussed should be held later in March.