(MENAFN) Oil prices leapt four per cent on Thursday and hit a three-week high in intraday trading in New York last night after Saudi Arabia sparked more rumours of action to cap production.
Saudi Arabia's energy minister, Khalid al-Falih, said members of the Opec cartel and other major producers would "discuss the market situation, including any action that may be required to stabilize prices", during an informal meeting next month in Algeria.
Brent crude, the international benchmark used to set prices in the North Sea, hit $46.66 a barrel at one point yesterday, while this morning in London, it was holding above $46. Its US counterpart, West Texas Intermediate, was up 0.6 per cent this morning to $43.77 a barrel.
Rumours of a production cap are often enough to spur a strong rally for oil and the same has been true this week " even despite the fact that few analysts expect it to yield an eventual deal.
This time, analysts are pointing to the record monthly output by Saudi Arabia in July as indicative of its intentions. Even if it did cap at these high levels, it is questionable this would solve the ongoing supply overhang that is depressing prices.
Opec members held similar discussions in the lead up to a meeting in Doha, Qatar, in April, which was one of the reasons behind a recovery in the oil price to above $50 a barrel. However, the talks yielded nothing as Saudi Arabia and Iran resumed their product turf war.
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