Oil price surges on output cutting signals

Oil prices closed higher on Friday, boosted by signals from Saudi Arabia that OPEC could cut output, but trading was volatile as investors digested and ultimately shrugged off warnings from the head of the US Federal Reserve about economic pain ahead.

Brent crude futures rose $1.65 to settle at $100.99 a barrel. US West Texas Intermediate (WTI) crude futures rose 54 cents to settle at $93.06 a barrel. Both contracts rose and fell by $1 throughout the session.

Overall, Brent gained 4.4% for the week, while WTI was set to rise 2.5%. The United Arab Emirates became the latest OPEC+ member to state it is aligned with Saudi Arabia’s thinking on crude markets, a source with knowledge of the matter told Reuters.

On Monday, Saudi Arabia flagged the possibility of production cuts to offset the return of Iranian barrels to oil markets should Tehran clinch a nuclear deal with the West.

The impression remains that Saudi Arabia is not willing to tolerate any price slide below $90. Speculators could view this as an invitation to bet on further price rises without the need to fear any more pronounced price declines.

Oil prices briefly fell after Fed Chair Jerome Powell said tight monetary policy may be in store “for some time” to fight inflation, meaning slower growth, a weaker job market and “some pain” for households and businesses.

In US supply, the oil drilling rig count, an indication of future production, rose by 4 to 605 in the week to Aug. 26, Baker Hughes Co said on Friday.