Sentiment was boosted by a rally in Wall Street shares and news that work was underway for the launch of the first sovereign bond issue of lead crude exporter Saudi Arabia before the eventual listing of the kingdom’s state-oil company Aramco.
Brent crude hit its highest level since October 12, 2015, reaching $53.73 a barrel before paring gains to trade up $1.44, or 2.8%, at $53.37. US West Texas Intermediate crude rose to $51.60, its highest since June 10, before trading at $51.38, up $1.57, or 3.2%.
Russian president Vladimir Putin said an output freeze or even a production cut were likely the only right decisions to maintain energy sector stability.
“Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join,” he said, speaking at an energy congress in Istanbul.
Opec aims to agree on cutting about 700,000 barrels per day, bringing its output to 32.5m-33m barrels per day by the time it meets in Vienna for its policy meeting at the end of November.
Opec has also asked Russia and other non-members to join in making cuts.
“Putin coming out to say Russia will be part of the initiative has added another layer of credence to the speculation there will be a co-ordinated cut,” said John Kilduff, partner at New York energy hedge fund Again Capital.
“At some point, the market will call them on it and say ‘show us the cuts’.
“And at that point, the Saudis might be willing to underwrite the cuts on their own because they really want these high prices. To me, $55 Brent is without doubt the next target.”
Saudi energy minister Khalid al-Falih said that he was optimistic of a deal by November.
His Algerian counterpart, Nouredine Bouterfa said he expected to see commitments on cuts from non-Opec oil producers at meetings in Istanbul this week. Money managers have amassed their largest bullish position in US crude futures in more than four months on Opec’s planned output cut, data showed on Friday.