Brent crude hit USD 35 per barrel on Thursday following after Russian Energy Minister Alexander Novak said Saudi Arabia had proposed to cut oil production by up to 5 percent by each country in order to support weak oil prices.
Novak also told reporters that there was a proposal of a meeting between OPEC and non-OPEC countries on the level of oil ministers and that Russia was ready for the meeting.
Crude prices hit a three-week high earlier, bouncing well off a 12-year low set this month, supported by the possibility that major producers may cooperate to cut production.
Brent crude was up USD 1.41 at USD 34.51 a barrel by 9:39 am ET, after hitting a session peak of USD 35.84.
It was at its highest since early January and was about USD 8 higher than the 12-year low set this month, although still down around 9 percent this month.
US crude was up USD 1.41 to USD 33.71 a barrel, down from an intraday peak of USD 34.82. It settled the previous session up 85 cents, a 2.7 percent gain.
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.
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).
“It will take some time for the market to rebalance,” said Aabed A. Al-Saadoun. “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 US 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.
“Cushing was a crisis zone because it was getting close to capacity, so there is some relief for the inventory overhang,” said Dominic Haywood, analyst at Energy Aspects.