After hitting a 13-year low on expanding stockpiles, crude oil surged Friday. Oil-related exchange traded funds jumped as traders speculated on potential production cuts out of the Organization of Petroleum Exporting Countries.
On Friday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, gained 5.4% and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, rose 5.0%. Year-to-date, USO declined 27.3% and BNO fell 19.1%.
After sliding over the past five sessions, WTI crude oil futures surged 11.1% to $29.1 per barrel on Friday while Brent crude futures jumped 9.2% to $32.8 per barrel.
Meanwhile, leveraged oil ETFs also shot up on the action. On Friday, the ProShares Ultra Bloomberg Crude Oil (NYSEArca: UCO), which takes two times or 200% daily performance of WTI crude oil, increased 7.8% and the VelocityShares 3x Long Crude ETN (NYSEArca: UWTI), which tracks three times or 300% the daily performance of WTI crude, gained 14.1%.
Oil prices rallied Friday after WTI crude dipped to its lowest settlement since May 6, 2003. Energy prices rebounded after the United Arab Emirates’ energy minister said OPEC members are “ready to cooperate” on cutting output, report Georgi Kantchev and Timothy Puko for the Wall Street Journal.
“Every time someone comes out and says ‘We’re ready to cooperate,’ there’s always a knee-jerk reaction,” to buy, Peter Donovan, broker for Liquidity Energy, told the WSJ. “Prices have come down so far, guys don’t want to get caught [selling]at the bottom.”
Venezuela has proposed that OPEC and non-OPEC members should freeze output at current levels.