The market hopes that oil producers could agree on measures that will support crude buoyed sentiment
Brent crude oil prices rose above $51 a barrel on Friday to hit an eight-week high and was on track to rise for a seventh trading day, as hopes that producers could agree measures to support crude buoyed sentiment.
International benchmark Brent crude oil futures were trading at $51.15 per barrel at 0618 GMT, up 26 cents from their last close. Brent prices remain in a bull-run that has lifted the market by over 20 percent since early August. Brent earlier hit $51.20.
US West Texas Intermediate (WTI) crude futures, were at $48.67 a barrel, up 45 cents.
"Oil prices climbed higher because of the US crude stocks downtrend and positive market sentiment, led by OPEC talks. Oil ETFs and managed money also continued to bet on the oil rise recently," a Hong Kong-based trader said.
Nigerian oil minister Emmanuel Ibe Kachikwu said on Thursday that while a cut in OPEC production is unlikely, there is hope a meeting of producers in Algeria next month could help shore up crude prices.
US crude was also pushed up by an open arbitrage opportunity to export WTI to Europe, leading to a rush of new orders.
However, analysts and traders warned the rally was overblown, especially since planned talks between the Organization of the Petroleum
Exporting Countries (OPEC) and other major producers like Russia to rein in on ballooning overproduction were unlikely to lead to a reduced supply overhang.
"Some believe – or more appropriately, hope – that the OPEC may come up with a plan to support prices at its informal meeting next month, something which we doubt will happen," said Fawad Razaqzada, a market analyst at Forex.com.
The market appeared to be approaching overbought territory, a Singapore-based trader said.
"Prices could potentially rise another $1 to $2 a barrel before they fall, but the market will need a catalyst to spark the selloff," the trader said.