Investing.com - Oil prices extended their recovery Friday, notching the best two-day gain since April as Saudi Arabia's energy minister assured markets that the production cut agreement between OPEC and allies led by Russia would be extended, albeit in tweaked form.
“I don’t think the question is at all whether we will extend or not,” Saudi Energy Minister Khalid Al-Falih said at the St. Petersburg International Economic Forum following discussions with Russia. “A rollover is almost in the bag for OPEC. The question is to calibrate with non-OPEC if there needs to be an adjustment from the first half.”
Falih did however say that he felt deeper cuts were unnecessary and that oil producers would need to evaluate the impact of sanctions on Iran and Venezuela.
New York-traded West Texas Intermediate crude futures 79 cents, or 1.5%, at $53.38 a barrel by 7:22 AM ET (11:22 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., traded up 99 cents, or 1.6%, to $62.66.
Despite the recovery, prices have still fallen 4% this week, as fears of a demand slowdown have grown, underlined by another sharp and unexpected in U.S. crude stocks.
Russian Energy Minister Alexander Novak, speaking at the same event as al-Falih, said demand growth could slow to below 1 million barrels per day this year.
Investing.com senior commodity analyst Barani Krishnan agreed that the selloff since the week of May 12 has been predicated by fears of a likely global recession from the U.S. trade wars with China and Mexico.
“Adding to the bearish picture was a worsening supply-demand outlook as U.S. oil production hit record highs and crude stockpiles ballooned while gasoline consumption weakened in what should be a seasonably strong period for driving,” he added.
Investment management firm Neuberger Berman warned that, despite the recovery over the last 48 hours, “volatility will likely continue to haunt us as the economy and markets adjust to a more modest growth outlook.”
Lastly, natural gas futures advanced 0.9% at $2.344 per million British thermal unit.
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