Oil headed for the biggest weekly advance since February 2011 amid the highest trading volatility in almost six years.
Futures rose for a second day in New York and have gained 7.1% this week. The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the US Oil Fund, ended at 63.14 on Thursday, the most since April 2009.
The United Steelworkers union, which went on strike at nine US oil plants on February 1, plans to resume bargaining with Royal Dutch Shell Plc next week after rejecting a sixth offer for a new labour contract for 30,000 workers.
Oil snapped its biggest four-day rally since January 2009 on Wednesday after US government data showed crude stockpiles in the world’s largest consumer surged to the highest level in more than three decades.
Saudi Arabia cut prices for March exports to Asia to the lowest in at least 14 years, signaling OPEC’s largest producer may continue to fight for market share.
“There’s a big debate as to whether the market should focus on the current bearish supply situation versus signs that may change,” Phil Flynn, a senior market analyst at the Price Futures Group in Chicago, said. Capital spending reductions by companies and the idling of drill rigs signal “there could be a change in the air,” he said.
West Texas Intermediate for March delivery climbed as much as $1.57, or 3.1%, to $52.05 a barrel in electronic trading on the New York Mercantile Exchange and was at $51.60 at 3:55 p.m. Singapore time.
The contract advanced $2.03 to $50.48 on Thursday. Total volume was about 38% above the 100-day average. Futures are down 3.1% this year.
Brent for March settlement increased as much as $1.49, or 2.6%, to $58.06 a barrel on the London-based ICE Futures Europe exchange. It’s up 8.9% this week. The European benchmark crude traded at a premium of $6.11 to WTI.
The USW, representing workers of more than 200 refineries, fuel terminals, pipelines and chemical plants, instructed all units on Thursday to decline the proposal from Shell, according to Lynne Hancock, a union spokeswoman in Nashville, Tennessee.
Shell is negotiating on behalf of companies including Exxon Mobil Corp. and Chevron Corp. in discussions that would serve as the foundation for local talks.
The Obama administration is monitoring the developments, Frank Benenati, a White House spokesman, said in an e-mailed statement.
Saudi Arabian Oil Co. reduced its Arab Light official selling price for March by 90 cents to $2.30 a barrel below a Middle East benchmark, a statement on Thursday showed. The state-owned company raised the grade’s premium for sales to the US after six months of cuts.
Saudi Arabia led a decision in November by the Organization of Petroleum Exporting Countries to maintain its collective output target at 30 million barrels a day.
The 12-member group, which pumps about 40% of the world’s oil, produced 30.9 million barrels a day in January, exceeding its quota for an eighth straight month.
In Europe, oil traders are storing 5.799 million metric tons of gasoline, diesel and other processed fuels in independent tanks in Amsterdam, Rotterdam and Antwerp, PJK International data show. That’s the highest level in estimates dating back to 1995, Pieter Kulsen, the Breda, Netherlands-based company’s founder, said.
US crude inventories expanded to 413.1 million barrels in the week ended January 30, the most in weekly records compiled since August 1982, according to the Energy Information Administration.
WTI may drop next week, according to a Bloomberg News survey of analysts and traders. Twelve of 32 respondents, or 38%, predict futures will decline through February 13, while 10 forecast an increase.
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