Oil hits fresh weekly highs on output freeze calls

Oil prices on both sides of the Atlantic resumed its recent uptrend and climbed further on Monday, after the bulls cheered renewed chatter around output freeze talks.

WTI struggles to extend beyond $ 42 barrier

Currently, both crude benchmarks rise 0.60%, with Brent around $ 44.50 while WTI hovers just ahead of $ 42 mark. Oil prices extended last week’s bullish momentum mainly driven by fresh talks of oil output freeze by some of the OPEC members and the Russian energy minister Novak. Russia’s Novak noted Monday that they may need to discuss freezing oil prices if oil prices decline.

According to Matt Smith of ClipperData, “OPEC members including Venezuela, Ecuador and Kuwait are said to be behind this latest reincarnation. But just like previous endeavours, it seems doomed to fail, given key OPEC members (think: Saudi Arabia, Iraq, and Iran) persist in their battle for market share, ramping up exports apace."

Amid latest news surrounding output freeze, markets appear to have ignored the negative impact of rising US rigs count data and Iraq’s price discounts to Asia on the black gold. While stronger oil demand growth as highlighted by AB Bernstein, a leading investment management and research firm, said that oil demand growth had been strong in 2015 and the first half 2016, at 2.0 and 1.5% respectively.

Attention now turns towards the weekly supply report from the API and EIA due later this week for fresh impetus on oil prices.