Oil higher amid contradictory reports on possible output cuts

Oil futures registered sharp gains amid contradictory reports regarding possible plans to reduce oil output by the Organisation for Petroleum Exporting Countries, in coordination with producing nations from outside the cartel, mainly Russia.

Russian energy minister Alexander Novak said Saudi Arabia had suggested output cuts of 5% at previous OPEC meetings, with the size of the reductions currently under discussion, Interfax reported.

However, at 15:26GMT Bloomberg reported that four delegates to OPEC had told the newswire they had not heard yet of any plans for talks.

According to Bloomberg, when Novak was asked whether the Russian Federation was still ready to meet with OPEC at a proposed meeting next month to coordinate their levels of production, he said "that is exactly the subject of discussion”.

The next regularly scheduled meeting of the cartel was not until June.

"OPEC’s hands are tied"

Another report from Interfax, earlier on Thursday, cited the Russian president´s spokesman, Dmitry Peskov, as having said that the Russian Federation was not planning to hold talks with Saudi Arabia or OPEC on the subject of oil.

As of 15:27GMT front month West Texas crude Intermediate futures were 4.3% higher to $33.74 per barrel on the ICE and those for Brent by another 4.7% to $34.74 per barrel.

Tim Evans, energy futures specialist at Citi Futures and OTC Clearing, pointed out to Market News International how Russian oil output may have reached 10.89m barrels per day in January, reflecting the resilience of the country´s output to low oil prices.

"We remain highly skeptical that such a meeting [in February] will result in credible cuts in supply; thus, we see this as nothing more than an attempt to shift market sentiment, and we do not expect that it will change the physical market imbalance," Barclays´s Michael Cohen, Miswin Mahesh and Warren Rusell said in a research note sent to clients.

"OPEC’s hands are tied. We see it as a hard sell for Saudi Arabia (and Russia, for that matter) to agree to cut production, while Iran continued to ramp up output," Barclays added.

"There is a vast difference between a meeting to exchange views on the state of the markets and a meeting to agree on a cut. This will likely be the former, not the latter."

Technical analysts at CitiFX told MNI further confirmation that a bottom was near in oil would come with a close above $32.40 for West Texas Intermediate futures - at a minimum on weekly price charts.