Oil rose on Wednesday, paring earlier losses after fresh comments
from Russia about its openness to talk with OPEC over output cuts helped
revive hope among investors that the world's largest producers could
act to boost prices.
Russian Foreign Minister Sergei Lavrov said if there
is consensus among the Organization of the Petroleum Exporting Countries
and non-OPEC members to meet, "then we will meet."
This 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 rose 40 cents to $33.12 a
barrel by 0930 GMT, pulling away from a session low of $32.30. U.S.
crude futures rose 46 cents to $30.34, 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 that we've seen in the
last one hour," PVM Oil Associates analyst Tamas Varga said.
"(Oil-producing) countries are at the brink of default ... so the situation is dire."
Cash-strapped Nigeria and Angola are discussing
potential financing from the World Bank, which, together with the
International Monetary Fund, is in talks with Azerbaijan.
The 70 percent 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.
Demand for oil, particularly in Asia, proved robust
last year, but not enough to absorb near-record supply and ballooning
inventories of unwanted crude.
U.S. crude stocks rose by 3.8 million barrels to
500.4 million in the week to Jan. 29, data from the American Petroleum
Institute showed.
"The (global) inventory situation is going to get
worse in the second quarter as we hit the peak refining rate at the end
of this quarter," Tony Nunan, oil risk manager at Mitsubishi Corp in
Tokyo, said.
A rebalancing between oil demand and supply will not come until mid-2017, Morgan Stanley said in a note.
"Despite the myriad announcements of capex cuts,
production has yet to respond enough to rebalance the market," Morgan
Stanley said.
Goldman Sachs in a note on Monday said volatility in
the oil price, which is at its highest since the collapse of failed U.S.
investment bank Lehman Brothers in 2008, could reach 100 percent as
storage capacity comes under pressure.
(Additional reporting by Keith Wallis in SINGAPORE; Editing by Dale Hudson)
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