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 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.
“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 report.
“This underlines the need for talks on coordinated production cuts, as OPEC also expanded its oil production in January to a multi-year high.”
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.
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 Hudson)