A worker fills the tank of a car at a petrol station in Cairo, March 12, 2013 (Reuters)
Oil prices jumped on Friday on hopes of a coordinated production cut sparked by comments from the energy minister of OPEC member United Arab Emirates.
Still, analysts said such a move remained unlikely and prices for Brent and U.S. West Texas Intermediate (WTI) crude were on track for weekly losses of more than 7 percent and 11 percent, respectively, as oversupply weighed.
Brent gained as much as 6 percent against its previous settlement and was up 4.9 percent at $31.53 per barrel at 0938 GMT.
"The comments by the UAE oil minister are pushing prices up ...but we're still in a long-term downturn. That hasn't changed," said Hans van Cleef, senior energy economist at ABN AMRO. He said Friday's spike is "an indicator that it's not a one-way price movement anymore ...we will see a period of high volatility."
UAE Energy Minister Suhail bin Mohammed al-Mazrouei said the Organization of the Petroleum Exporting Countries (OPEC) was willing to talk with other exporters about cutting output.
He added that cheap oil was already forcing some output reductions which would help rebalance the market.
WTI futures gained as much as 6 percent and were up 4.5 percent at $27.39 per barrel at 0938 GMT after hitting lows not seen since 2003 in the previous session.
Traders said the jump in WTI prices could have been a result of U.S. producers unwinding hedges they had locked in at higher prices in order to generate cash to service debt and costs.
Despite higher Brent and WTI, and the UAE comments, analysts said they saw little chance of OPEC and non-OPEC producers agreeing on a common policy.
"We view this as further jawboning, with the likelihood of a coordinated response on supply cuts very low," ANZ bank analysts said on Friday.
Oil prices have tumbled over 70 percent since mid-2014 as producers pump 1-2 million barrels of crude every day in excess of demand as economic growth stalls, led by China's slowdown.
Volatility has been high this year, with 10-20 percent price rises and falls common within only a few trading sessions.
"We expect recent crude volatility to persist," investment bank Jefferies said, adding that it expected oil markets to start rebalancing in the second half of the year.