gains after Russia says open to talking with OPEC
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[February 03, 2016]
By Amanda Cooper
LONDON (Reuters) - Oil rose on Wednesday,
paring earlier losses after Russia reiterated its openness to talking
with OPEC about output cuts, which 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 <LCOc1> was up 57 cents at $33.29 a barrel
by 1141 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
"(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.
"Russia yesterday reported a rise in its oil production in January
to just under 10.9 million bpd (barrels per day), which is a new
high since the break-up of the Soviet Union," Commerzbank said in a
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"This underlines the need for talks on coordinated production cuts,
as OPEC also expanded its oil production in January to a multi-year
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
A rebalancing between oil demand and supply will not come until
mid-2017, Morgan Stanley said in a note.
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
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