Oil headed toward the "magic" $50 mark this afternoon, after a larger-than-expected drop in US oil stocks buoyed investor confidence.
Brent crude, the global benchmark, jumped 0.91 per cent to $49.68 per barrel on London's ICE Futures Exchange this afternoon. Its US counterpart, West Texas Intermediate crude, rose 0.26 per cent to $46.70 on the New York Mercantile Exchange.
The oil industry has earmarked $50 per barrel as the figure necessary for it to stop bleeding cash. The two-year long rout has battered companies' balance sheets, forcing them to axe jobs and scale back or even abandon projects.
The benchmarks shot up in late afternoon trading after official data showed US oil stocks dropped by 2.5m in the week ended 12 August, beating analysts' expectations for a 200,000-barrel drawdown.
The US Energy Information Administration (EIA) report also showed petrol supplies declined by 2.7m barrels during this period, while distillate stockpiles swelled by 1.9m barrels.
Crude slipped into negative territory earlier in the day as investors speculated over whether Opec would be able to agree a production freeze when they meet on the sidelines of an energy conference in Algeria next month.
"The market is totally dominated by short speculators facing OPEC talk," SEB commodities strategist Bjarne Schieldrop said.
"Should this rally be believed? Do words speak louder than action for the second time this year? Or is the current strength one to be sold into?," PVM Oil Associates Tamas Varga said in a daily report.
"The advocates of a sustained price rally are firm believers in some kind of agreement between OPEC producers possibly together with non-OPEC countries. Recent history is not on their side and the Doha failure back in April is likely to encourage bears with itchy fingers to soon start selling short."