Investing.com -- Crude futures inched up on Friday extending their determined rally from a 12-year bottom hit earlier this month, as rumors continued to swirl that Russia and OPEC could work collaboratively to cut production as a means to stem a prolonged downturn in global energy markets.
On the New York Mercantile Exchange, WTI crude for March delivery wavered between $32.66 and $34.41 a barrel before settling at $33.66, up 0.44 or 1.31% on the session. U.S. crude posted its fourth straight winning session and its sixth in the last seven. Since slipping below $26.50 early last week, WTI crude has rallied approximately 25% to reach near three-week highs. In a volatile month marred by wild fluctuations, U.S. crude is on pace to end January down roughly 7%.
On the Intercontinental Exchange (ICE), brent crude for April delivery traded in a broad range between $34.58 and $36.11 a barrel, before closing at $36.02, up 1.22 or 3.48% on the day. On Thursday, North Sea brent crude surged more than 7% to an intraday high of $36.67, its highest level since Jan. 6. Brent crude futures have also rebounded 25% over the last week and are now on pace to finish virtually flat for the month.
Both the international and U.S. domestic benchmarks of crude posted their second consecutive weekly gain.
Investors continued to react to speculation that Russia and Saudi Arabia, two of the largest oil producers in the world, could agree to lower output as much as 5% in order to help reduce a massive supply glut throughout the world. Earlier this week, Russia energy minister Alexander Novak revealed that the two sides could meet later next month to hammer out a wide range of issues related to potential production cuts. Last month, output in Russia hit fresh post-Soviet records at above 10.8 million barrels per day.
"There are very many questions, on checking cuts, from what base to count from. In order to start working through these issues, we need general agreement, it’s too early to talk about that. That’s the subject of the meeting and discussion (in February)," Novak told reporters, according to news agency TASS.
A number of hurdles reportedly still need to be overcome for the agreement to be reached. Energy traders can be skeptical of any reports involving OPEC without receiving official comment from Saudi Arabia, the world's largest exporter of crude. On Thursday, four representatives from OPEC member states told Bloomberg they were unaware of such a meeting with non-OPEC members, while another representative had no knowledge of a considerable supply cut.
Elsewhere, oil services firm Baker Hughes said Friday that U.S. oil rigs declined for the sixth consecutive week last week falling by 12 to 498 for the week ending on Jan. 22. It marked the lowest level for the domestic rig count since March, 2010. Declining rig counts usually provide a lagging indicator that U.S. production is about to slow.
U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, soared more than 1% to an intraday high of 99.88. The dollar remains near a 12-month high from December, when the index eclipsed 100.00.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.