Oil Surges after hitting One-month Low

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Oil prices have recovered on Friday after falling to a one-month low a day earlier encouraging investors to purchase at economical levels, prior to the Organization of the Petroleum Exporting Countries (OPEC) meeting in May where manufacturers could extend the production cuts.

Growth was also supported by a drop in the dollar and indications that Russia, a non-OPEC member, was completely agreeing with the output limits decided among major producers last year by cutting 300,000 barrels per day.

Saudi Arabia’s energy minister was pleased about the news saying Russia’s involvement was good and that total non-OPEC compliance was 85 percent.

The US Dollar Index (DXM7) was down 0.09 percent to $98.93 on Friday.

U.S. West Texas Intermediate (WTI) crude was up 0.9 percent to $49.43 a barrel while Brent oil futures were also 0.9 percent high to $52.31 per barrel.

Gasoline RBOB futures also edged up 0.6 percent to 1.5727 on Friday.

However, oil prices were still heading off for its second straight weekly and monthly losses for two reasons. First, is the Thursday’s crude prices fall following the restart of two main Libyan oilfields the Sharara and El Feel due to disputes of an armed group that had blocked the pipelines there.  Second, are concerns over the OPEC output cut said to have been unsuccessful to completely constrict the saturated market.

WTI crude is set for small weekly loss about 8 percent below its peak in April. Brent is already almost down around 8.5 percent from this month’s peak and is still on track for second although small week of declines.

OPEC and other manufacturers including Russia agreed at the start to cut production by almost 1.8 million barrels per day, this was only during the first half of the year. However, OPEC gave in to demands to extend the cuts in order to cover the whole 2017 so as to take care of brimming supplies in other places.

The organization stated that the output cut will be extended bumping into the reality of the restart of two Libyan oilfields and persisting expansion of US shale oil.

Meanwhile, Russia has called for its state-owned companies to pay out half of their earnings in dividends this year in an effort made by the government to drive corporations such as Gazprom, Roseneft, Aeroflot and Alrosa to block openings in the federal budget.

Shares in the state-run companies went up on Friday after the announcement.

Gas group Gazprom’s shares rose 2 percent to 136.21 in Moscow as of 12:50 GMT. The company said on Thursday that it plans to pay out 7.89 rubles ($0.14) per share in dividends less than would be approved by the 50 percent demand.

Russia’s biggest oil company and largest oil producer by output Rosneft has decided to give 35 percent of its 2016 profits in dividends.

Moscow’s index MICEX (MCX) boosted 0.3 percent to 2,019 on Friday.

Last February, Russia’s deputy economy minister Olga Dergunova said that raising dividend costs could bring as much as 110 billion rubles ($1.9 billion) of additional budget profits.

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