(Bloomberg) -- Oil surged to its biggest gain in five months as OPEC and its allies moved closer to a meeting to extend supply cuts while the European Central Bank raised hope of a new stimulus to pump up demand.
Futures in New York rose as much as 4.6%, taking off on word that OPEC had proposed a mid-July gathering with Russia and other partners after weeks of uncertainty over their plans. Speaking at a forum in Portugal, ECB President Mario Draghi said “additional stimulus will be required” if the economic outlook doesn’t improve.
The OPEC+ coalition, which pumps more than half the world’s crude, has been bickering for a month over the timing of their meeting, even as output curbs that helped resurrect prices earlier this year near expiration. A meeting by the U.S. Federal Reserve on Wednesday could further improve the market’s outlook, if it follows Europe’s lead.
“Tomorrow’s Fed announcement after a two-day meeting may set the stage for oil for the rest of the month," said Phil Flynn, senior market analyst at Price Futures Group. “If they come off very dovish than oil should rally hard."
Prices got a further boost after the U.S. and China said their presidents will meet in Japan next week to relaunch trade talks after a month-long stalemate. They gave back some of the gains after a report that the White House explored the legality of demoting Fed Chairman Jerome Powell, raising worries about political interference with the central bank.
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West Texas Intermediate for July delivery rose $1.97 to settle at $53.90 a barrel on the New York Mercantile Exchange, after earlier jumping by the most since Jan. 9.
Brent for August settlement gained $1.20 to settle at $62.14 a barrel on London’s ICE (NYSE:ICE) Futures Europe Exchange. The global benchmark crude traded at a $8.77 premium to WTI for the same month.
