Just a few hours after WTI Crude dipped below $50, oil prices wiped out losses and started climbing on Thursday after reports that Russia has conceded that it needs to reduce oil production and join a new Saudi-led OPEC cut to balance the market.
At 10:10 a.m. EDT on Thursday, WTI Crude rallied 2.05 percent at $51.32, while Brent Crude was up 1.35 percent at $59.89.
Earlier in the day WTI Crude had breached the $50 support level for the first time in more than a year, following yet another U.S. crude inventory build that the EIA reported on Wednesday.
Then came out a report by Reuters that Russia has started to concede that it needs to join a new Saudi-led oil production cut, but is still bargaining with its key OPEC partner over how much, how fast, and for how long it would potentially reduce its oil output.
Analysts believe that Russia agreeing to reduce production would be crucial for the OPEC/non-OPEC group to hammer out an agreement to cut. Saudi Arabia’s Energy Minister Khalid al-Falih has already said that while the Saudis are going to do whatever it takes to stabilize the oil market, they can’t and won’t do it alone without a collective decision from the OPEC and non-OPEC deal participants.
Russia is comfortable with oil at around $60, Russian President Vladimir Putin said on Wednesday, a week ahead of the OPEC+ meeting in Vienna and just two days before the G-20 summit in Buenos Aires, at which Putin is expected to meet separately with U.S. President Donald Trump and with Saudi Crown Prince Mohammed bin Salman.
Putin also thanked Saudi Arabia and its Crown Prince for the OPEC-Russia cooperation in managing the oil market.
Putin’s remarks show support for the Saudi prince, while analysts think that the G-20 summit in Argentina may be the more important venue for the OPEC-Russia oil cooperation than next week’s full OPEC+ meeting.
By Tsvetana Paraskova for Oilprice.com
