Crude oil prices soared on hopes for an output freeze which could accelerate the stricken crude market's recovery, despite some gains being parred by a muted statement from oil kingpins Russia and Saudi Arabia.
Brent crude, the global benchmark, shrugged off earlier losses to swell as much as 5.49 per cent to $49.40 per barrel in late morning trading. Its US counterpart, West Texas Intermediate crude, rose as much as 4.70 per cent to $46.53.
Both benchmarks' gains were dampened after Russia and Saudi Arabia announced plans for a working group to monitor the market and draft recommendations to stabilise prices, Russian news agency Interfax reported. This suggests market mavens had expected a stronger statement from two of the world's major oil producers.
It comes amid hopes that Opec and non-Opec members will be able to reach an output freeze deal during a meeting later this month in Algeria. Previous attempts to reach an agreement have so far failed, largely due to de facto leader Saudi Arabia's desire to defend its market share.
But analysts remained sceptical over whether any action would be taken. Moreover, others warned that a successful outcome was still likely to have a muted impact on the global oil market.
Tony Nunan, oil risk manager at Japan's Mitsubishi Corp, said: "Even though there will be discussions in Algeria, there's no strong feeling that anything will be done, so the supply remains high."
"Saudi Arabia's position hasn't changed. They are open to some kind of production freeze if Iran and other major producers join in," he added.
Morgan Stanley analysts wrote in a note: "Even if successful, an Opec freeze would likely be a short-term positive but a medium-term negative for oil prices."
They continued: "If a short-term freeze were implemented, oil prices would rise on the news, but it would do little to correct the near-term oversupply."