[NEW YORK] Global oil prices hit fresh five-month highs on Tuesday, piercing US$44 a barrel and extending earlier gains after a report that top producers Russia and Saudi Arabia have agreed to freeze output ahead of a much-anticipated producers meeting on Sunday.
Russia's Interfax news agency quoted a diplomatic source in Doha saying that Russia and Saudi Arabia reached a consensus on Tuesday about an output freeze and that the final decision will not depend on Iran.
Brent crude rose by as much as 71 cents, or 1.6 per cent, to touch US$44 a barrel in the three minutes after the report was released around 10:30 am EDT (1430 GMT).
By 11:17 am EDT (1523 GMT), prices extended those gains and were up US$1.28, or 2.9 per cent, at US$44.06 a barrel.
US crude was up US$1.09, or 2.68 per cent, at US$41.45 a barrel, just shy of US$41.58, its highest since March 22.
Oil markets were already boosted ahead of the much-anticipated meeting between members of Opec plus outside producers in Doha, Qatar, on Sunday to discuss freezing output, but the comments fueled hopes that oil producers will agree on steps to tackle a supply glut.
Analysts and traders remained somewhat sceptical about the news, citing that while bullish players appear to be driving the market higher on a global supply-demand rebalancing, the threat of record-high inventory levels and producers bringing new oil once prices rebound continued to loom over the market.
"The market appears to be taking a lot of support from positive statements. But, this isn't the first time the Russians have come out and made remarks related to a production freeze being imminent," said Gene McGillian, a senior analyst at Tradition Energy.
Mr McGillian added that Iran's participation in the output freeze would be crucial for a more meaningful discussion regarding supply cuts.
On the charts, the midmorning rally pushed both Brent and US crude through key resistance levels at their 200-day moving averages, which stood at US$43.53 for Brent, potentially putting the market on a firmer technical footing. "If the 200-day moving average is broken, we expect to see more speculative flows coming into crude oil," said Olivier Jakob, analyst at Petromatrix.
Industry group the American Petroleum Institute is scheduled to release its report on Tuesday at 4:30 pm EDT (2030 GMT). US commercial crude oil inventories likely rose last week, while refined product stockpiles probably fell, a preliminary Reuters poll showed on Monday.