Crude oil soars to 11-month high, registers 8% weekly gain on Saudi production cut

Crude oil prices hit their highest levels in nearly a year on Friday, gaining 8 per cent on the week, supported by Saudi Arabia’s pledge to cut output and strong gains in major equity markets.

Brent crude settled at $55.99 a barrel, climbing $1.61, or 3 per cent, on the day and 8.1 per cent on the week. West Texas Intermediate crude futures (WTI) closed at $52.24 a barrel, gaining $1.41, or 2.8 per cent, also its highest since late February. WTI posted a weekly gain of 7.7 per cent.

Saudi Arabia this week pledged extra, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March as part of a deal under which most producers known as the OPEC or Organization of the Petroleum Exporting Countries plus will hold output steady during new lockdowns.

The kingdom, the de facto leader of the OPEC, was at odds with some other producers that wanted to boost output to head off US shale companies from capturing more market share. Eventually, an agreement was reached to allow Russia and others to boost output while the Saudis restrict theirs.

“This week the Saudis stepped up to try to take over the market and took ownership of getting prices stabilized,” said John Kilduff, partner at Again Capital LLC in New York. “It seems like they’re on a mission again to get prices back up.”