Oil extended a recent rally in Asia today, boosted by weakness in the dollar and Russia saying it could meet the OPEC producers’ group for talks on possible output cuts to ease a painful supply glut.
But analysts cautioned against putting too much hope on such talks, noting that similar discussions in the past had failed to end with concrete results.
By 0315 GMT, US benchmark West Texas Intermediate was up 21 cents, or 0.63 per cent, at USD 33.43 and Brent for March gained 26 cents, or 0.77 per cent, to USD 34.15.
Prices have crashed by about three quarters since mid-2014 owing to weak demand, overproduction, the supply glut and a global economic slowdown, particularly in key user China.
But both contracts surged yesterday after Russian reports that Energy Minister Alexander Novak had said Moscow was ready to take part in talks with OPEC to establish possible “coordination”.
He said the discussions could be making production cuts of up to five percent production cuts per country.
However, the gains were later pared and Phillip Futures analyst Daniel Ang said the rise has been driven more by a fall in the dollar after US data showed a steep 5.1 percent fall in new orders for manufactured goods in December.
That was far worse that analysts expected and underlined the weakness in the manufacturing sector of the world’s biggest economy and top oil consumer.
Ang told AFP “there could be some bullishness” coming from Russia’s plans to talk with OPEC “but nothing concrete has been struck yet”.
Research house Capital Economics said in a note it remains “sceptical that anything tangible will come of the latest calls for coordinated action” among oil producers.
“These discussions have never come to anything substantial in the past,” it said.