Feb 16, 2016 08:10 AM EST

Oil Has Extended Rally With Possible OPEC Counteracting Low Prices

Oil Prices bounced back on Monday effectively extending last week's rally riding high on the speculation that OPEC might choose to slash production to cut the oil glut that pushed oil prices to their lowest in more than a decade.

The global bench mark, Brent crude futures, climbed 33 percent at $33.69 per barrel at around 1023 GMT. On Friday's closing hours, U.S. futures traded at $29.79 per barrel, an increase of 35 cents. But it is expected that trading on Monday will be thinner because of the U.S. President's Day holiday.

Because of the OPEC rumor, global oil prices soared over 12 percent Friday. Emmanuel Ibe Kachikwu, the Nigerian oil minister stated Sunday that OPEC's mood is changing from mistrust to a development of consensus. Apparently each member nation feels that a decision must be made on how the oil glut should end.

Scheduled for delivery in March on the New York Mercantile Exchanges is crude oil tagged at 36 cents, or 1.22 percent which will trade it at $29.98 per barrel by 9:40 AM ET or 14:40 GMT.

Last Friday, oil traded in New York climbed $3.23, or 12.32 percent, the largest one-day gain in seven years. With increased chances that there will be a coordinated oil production cuts by OPEC members, investors were spurred to close out their bets on lower prices.

But even with Friday's price gains, last week's oil futures trading in New York has it losing $1.53 or 4.69 percent. The U.S. benchmark plunged to its 13-year low which is $26.05 last Thursday prodded by the Cushing delivery hub record crude inventories that incited worries about an oil supply glut.

"Some traders still think about the chances of an OPEC plus Russia (production) cut and close their short positions," Frank Klumpp said. He is an oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.

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