The oil price has bounced today after stockpiles in the US showed a shock decline, despite investors expecting a new record high.
The oil price is up today by around five per cent, with international benchmark Brent crude trading at $39.77, while US oil hit $37.96.
The US Energy Information Administration (EIA) reported that stocks of crude oil fell by as much as 4.9m barrels throughout the week despite refineries continuing to hike output.
A fall in imports dragged down total stocks.
Analysts polled by Reuters had expected the week's inventory to show a rise of 3.2m barrels, which would have been an eighth straight record high.
The price of oil had sunk earlier this week as hopes of a deal between the Organization of the Petroleum Exporting Countries (Opec) and Russia to freeze production at January levels seemed to be falling apart.
The initial output freeze deal, agreed in February, has pushed the oil price up by 50 per cent from a 12-year low of $27 a barrel in January.
The countries are planning to meet again on 17 April in Doha to finalise the deal.
Last week Saudi Arabia’s deputy crown prince Mohammed bin Salman surprised the market by saying any output freeze deal would be dependent on Iranian participation.
His comments were followed by Iran’s Bijan Zanganeh telling the country’s Mehr News Agency Iran still intends to increase its output to four million barrels a day, back to pre-sanction levels.
Yesterday Kuwait's Opec governor tried to reassure the market, saying the April meeting will deliver an agreement to hold output at January highs.
The deal was dealt another blow last week when it was revealed Russian oil output rose in March, despite promises from Russian President Vladimir Putin that the country's oil production would not rise in 2016.