Investing.com - Oil prices staged a dramatic rally on Friday, with the U.S. benchmark posting its biggest one-day gain in seven years as a renewed possibility of coordinated production cuts prompted investors to close out bets on lower prices.
On the New York Mercantile Exchange, crude oil for delivery in March surged $3.23, or 12.32%, to end the week at $29.44 a barrel.
Crude prices received a boost following reports late Thursday that OPEC members are preparing to cooperate on potential production cuts, according to United Arab Emirates' energy minister Suhail bin Mohammed al-Mazrouei.
The UAE is regarded as a key cog for smaller OPEC members desperate for increases in oil prices, given its reluctance to slash output in recent months. Any deal requires the approval of Saudi Arabia, the world's largest exporter.
Futures received a further boost after industry research group Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. decreased by 28 to 439 last week.
Despite Friday’s strong gains, New York-traded oil futures declined $1.53, or 4.69%, on the week, the second straight weekly loss.
Nymex prices slumped to $26.05 on Thursday, a level not seen since 2003, as record high crude inventories at the Cushing delivery hub underlined concerns over a supply glut. U.S. oil prices are down nearly 23% so far this year.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for April delivery soared $3.30, or 10.98%, on Friday to close the week at $33.36 a barrel. A day earlier, Brent futures dipped 78 cents, or 2.53%.
On the week, London-traded Brent futures declined 63 cents, or 2.06%, the second consecutive weekly drop.
Brent prices are down almost 13% in 2016 as investors worried that a huge oversupply in crude was coinciding with a global economic slowdown.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share.
Oversupply issues will be exacerbated further as Iranian exports return to the global oil market.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $3.92, compared to a gap of $3.85 by close of trade on Thursday.
In the week ahead investors will be watching U.S. inflation data for indications on whether the Federal Reserve will raise rates at all this year.
China is to release what will be closely watched trade and inflation data and China’s markets are to reopen Monday after the week-long Lunar New Year holiday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 15
Japan is to publish preliminary data on fourth quarter economic growth.
China is to report on the trade balance.
Markets in the U.S. will be closed for a national holiday.
Tuesday, February 16
In the euro zone, the ZEW Institute is to report on German economic sentiment.
The U.S. is to release a report manufacturing activity in the New York region.
Wednesday, February 17
The U.S. is to release data on producer prices, building permits, housing starts and industrial production, while the Fed is to issue the minutes of its January monetary policy meeting, where it kept rates on hold.
Later Wednesday, the American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
Thursday, February 18
China is to release data on consumer and producer price inflation.
The U.S. is to produce reports on manufacturing activity in Philadelphia and initial jobless claims, while the U.S. Energy Information Administration is to release its weekly report on oil supplies.
Friday, February 19
The U.S. is to round up the week with data on consumer inflation.