Oil rose on Wednesday, paring earlier losses after fresh comments from Russia about its openness to talk with OPEC over output cuts helped revive hope among investors that the world's largest producers could act to boost prices.
Russian Foreign Minister Sergey Lavrov said if there is consensus among the Organization of Petroleum Exporting Countries and non-OPEC members to meet, "then we will meet", Trade Arabia reported.
This helped push the price of oil, which had been set for a third day of declines after data on Tuesday showed another big build in US inventories, off the day's lows.
"Is there going to be a meeting between Russia and OPEC? That is a supportive factor in this rally that we've seen in the last one hour," PVM Oil Associates analyst Tamas Varga said. "Oil-producing countries are at the brink of default ... so the situation is dire."
Cash-strapped Nigeria and Angola are discussing potential financing from the World Bank which, together with the International Monetary Fund, is in talks with Azerbaijan.
The 70% drop in crude price over the last 18 months has hit the budgets of oil-dependent nations such as Nigeria, Venezuela, Russia and some Persian Gulf nations.
Demand for oil, particularly in Asia, proved robust last year, but not enough to absorb near-record supply and ballooning inventories of unwanted crude.
US crude stocks rose by 3.8 million barrels to 500.4 million barrels in the week to January 29, data from the American Petroleum Institute showed.
"The global inventory situation is going to get worse in the second quarter as we hit the peak refining rate at the end of this quarter," Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, said.
A rebalancing between oil demand and supply will not come until mid-2017, Morgan Stanley said in a note.
"Despite the myriad announcements of capex cuts, production has yet to respond enough to rebalance the market," Morgan Stanley said.
Goldman Sachs in a note on Monday said volatility in oil price, which is at its highest since the collapse of failed US investment bank Lehman Brothers in 2008, could reach 100% as storage capacity comes under pressure.
