Prices of crude which had hit a record low ten days ago moved up earlier today to $33.29 a barrel after world’s biggest crude producer, Russia, signified its intention to initiate talks with Organization of Petroleum Exporting Countries over cuts in oil output.
This decision by Russia has helped push the price of oil, which had been set for a third day of declines after data on Tuesday showed another big build in U.S. inventories, off the day’s lows.
Brent for April delivery LCOc1 was up 57 cents at $33.29 a barrel by 11:41 GMT, pulling away from a session low of $32.30. U.S. crude futures rose 54 cents to $30.42, off a session low of $29.40.
“Is there going to be a meeting between Russia and OPEC? That is a supportive factor in this rally,” PVM Oil Associates analyst Tamas Varga said. “Oil-producing countries are at the brink of default … so the situation is dire,” he added
The 70% drop in the crude price over the last 18 months has hit the budgets of oil-dependent nations such as Nigeria, Venezuela, Russia, and even some of the richer Gulf nations such as Bahrain.
“Of course Ecuador, Venezuela, Nigeria and Algeria will be happy to take part in the consensus meeting, but it’s doubtful that the Iraqis and Iranians will agree to make a cut,” said Sarah Emerson, managing director of ESAI Energy Inc., an oil consulting company in the U.S..
“Do you think the Iranians would make a cut? And if they don’t, there’s little likelihood the Saudis would agree to one.”