Oil price in longest rally this year on Russia talks

Oil is heading for the longest run of weekly gains since May as Nigeria said key members of OPEC intend to meet with other producers in Russia this month to renew talks on an agreement to freeze output.

Futures rose as much as 0.9 percent in New York on Friday, taking gains over the last three weeks to about 18 percent.

Brent for May settlement was 25 cents higher at $37.32 a barrel on the London-based ICE Futures Europe exchange, rising for a fifth session, the longest run of gains since November. Prices are up 6.4 percent this week. The European global crude was at a premium of 72 cents to WTI for May.

There will be a “dramatic price movement” when the meeting takes place on March 20, Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Thursday.

A production cap will help to balance the market and trigger a price rebound in the second half, said Daniel Yergin, vice chairman of consulting group IHS Inc.

Oil is still down about 6 percent this year on speculation a global glut will be prolonged amid brimming U.S. stockpiles and the outlook for increased exports from Iran after the removal of sanctions.

Saudi Arabia, Russia, Qatar and Venezuela agreed on Feb. 16 in Doha that they would freeze output if other producers followed suit in an effort to tackle the oversupply.

“Investors are not necessarily buying into a bull market scenario yet, but at least it’s a relief that prices have stopped falling,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “A production freeze will be very difficult to achieve, the market is not expecting Iran to curb its output. The large stockpiles act as a cap on any really big rallies from here.”

West Texas Intermediate for April delivery gained as much as 32 cents to $34.89 a barrel on the New York Mercantile Exchange, and traded at $34.82 at 2:24 p.m. Hong Kong time. The contract slid 9 cents to $34.57 on Thursday. Total volume traded was about 19 percent below the 100-day average.

While Russia confirmed its readiness to take part in the freeze talks, the time and date of the meeting is still being discussed, according to a statement on the website of the nation’s Energy Ministry. Nigeria’s Kachikwu didn’t specify whether Iran would attend the planned discussions.

Oil production and stockpiles remain elevated:

Output from the Organization of Petroleum Exporting

Countries fell by 79,000 barrels a day to 33.06 million a

day in February. Saudi output was unchanged while Iran

pumped an additional 140,000 barrels a day.

U.S. crude stockpiles expanded by 10.4 million barrels last week to 518 million barrels, the highest level since 1930, according to data from the Energy Information Administration.