Oil rebounded this week from recent lows after Opec sprang a surprise September meeting, at which Saudi Arabia hinted producers could agree to limit output.
Brent crude futures were 56¢ higher at $46.60 at barrel by 1:16pm ET (1716 GMT) after touching a more than three-week high of $46.99 earlier.
US crude rose 66¢ to $44.15 after touching its highest level since July 22 at $44.57 per barrel.
Brent crude is up about 5% on the week, on track for its biggest weekly gain since May while US crude is 5.5% higher, on track for its biggest week since April.
The Organisation of Petroleum Exporting Countries (Opec), whose 14 nations pump one third of global oil, on Monday called an informal meeting that will take place on the sidelines of the International Energy Forum in Algeria in late September.
News of the unscheduled gathering, ahead of Opec’s next regular production meet in Vienna on November 30, sparked speculation of fresh measures to stabilise the market — and sent prices soaring on Monday. They powered even higher on Thursday after Saudi Arabia’s powerful oil minister hinted that producers could agree to limit output.
Saudi oil chief Khalid al-Falih was reported as saying that the informal Opec meeting would be an occasion for producers to discuss “any possible action”.
Prices jumped more than 4% in reaction to the comments, which were seen as a positive development in a market grappling with a supply glut.
“Crude oil prices have stormed back to life over the past couple of weeks, albeit in a volatile manner,” City Index analyst Fawad Razaqzada told AFP yesterday.
“The latest trigger behind the rally has been attributed in the media to comments from Saudi Arabia’s minister, who on Thursday said his country — which is the largest Opec oil producer — could participate in co-ordinated action to help balance the crude oil market.
“I am not sure if this is the main reason, for prices had already bounced last week.
“What’s more, similar promises were made earlier this year and no action taken.
Yet oil prices were able to march on regardless.”
Thursday’s rebound follows a drop in prices earlier this week after official US data showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply.
A monthly report from Opec also showed Saudi Arabian oil production was at nearly 10.5mn barrels per day in July — a record high, above peak levels seen the same time last year.
Opec meetings earlier this year failed to agree on any production ceiling, as key producers preferred instead to fight for market share in a Saudi-led strategy.
“The comments from Saudi oil minister Khalid al-Falih have served to fan the flames of the Opec announcement in further ramping up expectations for some collaboration amongst oil producing nations to support prices,” said analyst David Cheetham at brokers XTB.
“Whether or not an arrangement to support the oil price will be agreed upon is almost neither here nor there at the moment, with just the possibility of reducing output providing enough reason for the market to rally this week.”
Oil prices had entered a “bear” market last week on oversupply concerns, falling more than 20% and closing below $40 a barrel for the first time since April.
The International Energy Agency (IEA), meanwhile, gave a mixed outlook for crude on Thursday.
The Paris-based IEA energy watchdog cut its 2017 forecast for oil demand growth because of a weaker outlook for the world economy following Britain’s vote to leave the European Union.
On the other hand, oil oversupply, which has again been weighing on crude prices since June, will disappear in the latter part of 2016, the IEA predicted.