The biggest bullish third quarter oil rally came in this year after dying out as reports surfaced regarding noncompliance amongst members regarding the set target for cuts. The reports dampened the enthusiasm that had sent prices for oil futures soaring as international agencies raised their forecasts of demand for oil in the next few years.
EIA released official figures for oil inventories in US, the authority said crude oil inventories in the week to September 29 dropped by as much as 6 million barrels to 465 million barrels. This compares with an average analyst expectation of a 300,000-barrel draw, although the actual forecasts ranged from a build of 2.7 million barrels to a decline of 3 million barrels.
In the United States, West Texas Intermediate (WTI) crude futures were weaker, trading at $49.97 per barrel, down 1 cent from their last close.
Brent crude futures, the international benchmark for oil prices, were at $55.89 per barrel at 0259 GMT, up 9 cents, or 0.16 percent, from their previous close.
Russian President Vladimir Putin said on Wednesday that a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to cut oil output to boost prices could be extended to the end of 2018, instead of expiring in March 2018.
Furthermore, oil prices witnessed a rebound after Russia announced that it wants the cuts to go well into the next year. Saudi Arabia and Russia have found common ground as their collaboration on the output cuts have brought both the countries close to each other. King Salman of Saudi visited Russia today with a high profile delegation. The meeting is expected to bring deals worth billions of dollars as Saudi Arabia eyes to increase oil investments in the Russian region.
The visit is also a proof of strengthening relations between the two nations, this is the first ever visit by a sitting Saudi Monarch in an official capacity to Russia. The leaders are set to sign joint investment deals worth more than $3 billion on Thursday, Russian Energy Minister Alexander Novak told the Financial Times on Wednesday, including a $1.1 billion agreement for Russian petrochemical firm Sibur to build a plant in Saudi Arabia.