Crude oil prices climb 5% on US jobless drop, Opec+ meeting hopes

NEW YORK: Oil prices rose on Friday after an unexpected fall in the May US jobless rate and Opec's decision to bring forward to Saturday discussions on whether to extend record production cuts.

Brent crude futures were up $2.07, or 5.2 per cent, at $42.07 a barrel by 11:05 a.m. EST (1505 GMT). US West Texas Intermediate (WTI) crude futures rose $1.65, or 4.4 per cent, to $39.02 a barrel.

The US Labor Department reported a surprise fall in the jobless rate to 13.3 per cent last month from 14.7 per cent in April.

Brent has risen 17 per cent since Friday to reach a three-month high, in a range more comfortable for producers like Russia. The contract has more than doubled since crashing as low as $15.98 a barrel on April 22. WTI is up 11 per cent.

Both benchmarks were headed for a sixth week of gains, lifted by the output cuts and signs of improving fuel demand as countries ease lockdowns imposed to fight the new coronavirus outbreak.

"Opec and the US jobless drop boosted the market," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "If we see jet fuel demand recover, that may give us hope that we can look ahead to a day where these supplies can dwindle down," said Flynn, pointing to American Airlines Group Inc's announcement Thursday that it would increase US flights in July.

Russia's energy ministry said a video conference of a group of leading oil producers, known as Opec+, would be held on Saturday.

The market was hopeful that some laggard countries may have agreed to align with the deal.

Opec+ had said it would bring forward the meeting, which had been scheduled for next week, should Iraq and others agree to boost adherence to supply cuts.

Two Opec+ sources said Saudi Arabia and Russia had agreed to extend deeper cuts until the end of July but said Riyadh was also pushing to extend them until the end of August.

If Opec+ fails to agree to roll over the output curbs, the cut could drop back to 7.7 million bpd from July through December as previously agreed.

Adding support was the first tropical storm of the season in the US Gulf of Mexico. Storm Cristobal was expected to enter the central Gulf this week, an area rich with offshore platforms, and could make landfall along Louisiana's refinery row on Sunday.