Oil steadied above $33 per barrel on Thursday, well off a 12-year low set earlier in the month, supported by the possibility that major producers may cooperate to cut production.
Russian officials have decided they should talk to Saudi Arabia and other OPEC countries about output curbs to bolster oil prices, the head of Russia’s pipeline monopoly said.
Members of the Organization of the Petroleum Exporting Countries such as Nigeria and Venezuela have called for cuts to bolster the oil price, which has halved since last May.
Until this week, however, there were few signs that the biggest producers were ready to make such a move.
“The fact that the bigger oil producers are talking in these terms is limiting the downside,” Michael Hewson, chief market analyst at CMC Markets, said.
Brent crude was 18 cents higher at $33.28 a barrel by 0856 GMT, after ending up 4.1 percent in the previous session.
It was around $6 higher than the 12-year low set earlier in January, but still down around 11 percent so far this month.
U.S. crude rose 4 cents to $32.34 a barrel. It settled the previous session up 85 cents, a 2.7 percent gain.
Saudi Arabia’s deputy minister for company affairs at the Ministry of Petroleum and Mineral Resources said on Thursday in Tokyo that OPEC estimates global oversupply to be around 2 million barrels per day (bpd).
“So it will take some time for the market to rebalance,” said Aabed A. Al-Saadoun. But he added: “We feel that the market will begin to come into balance in 2016 and that demand for energy in all forms will continue to increase”.
The Energy Information Administration said on Wednesday that U.S. crude inventories climbed by 8.4 million barrels last week, higher than analyst expectations for a rise of 3.3 million barrels.
That brought crude inventories to the highest level since the EIA began tracking the data.
However, investors overlooked this seemingly bearish data and focused on crude stocks at the Cushing, Oklahoma delivery hub, which fell by 771,000 barrels. [EIA/S]
“The fact the oil price didn’t fall after the inventory build suggests that the risk now is to the upside and I see oil forming a short-term base around $35 to $38 per barrel,” Hewson at CMC said.