Oil prices up in Asia on Russia-Saudi talks

SINGAPORE – Crude prices rose in Asia Tuesday after Russia and Saudi Arabia pledged to work on addressing a global supply glut, but analysts said gains would be limited after the two sides provided scant detail about their plans.

Saudi Energy Minister Khaled Al Falih and his Russian counterpart Alexander Novak agreed to "act together" to steady the market but stopped short of agreeing to a production freeze.

On the sidelines of the G-20 summit in China, the ministers said they will act "together or in cooperation with other oil productions" and agreed to set up a "joint monitoring group" to offer recommendations to prevent price fluctuations. 

News that the two sides were about to make an announcement sent both contracts soaring Monday but the gains were all but wiped out after the statement.

At about 7:20 GMT, the US benchmark West Texas Intermediate (WTI) was up 78 cents, or 1.76 per cent, at $45.22 and Brent added six cents, or 0.06 per cent, to $47.69. With US markets closed Monday for a holiday, electronic transactions on WTI will be booked Tuesday for settlement purposes.

The comments come three weeks before Russia joins OPEC, of which Saudi Arabia is the kingpin, for talks in Algeria to discuss the supply crisis that has hammered prices for two years.

"Despite the rather nebulous language [of the statement] the market was clearly on the hope side of the equation," OANDA senior market analyst Jeffrey Halley said in a note.

"The longevity of the rally being how long before reality bites with the OPEC meeting still three weeks away."

The previous attempt at reaching a deal in April was scuppered by OPEC member Iran's refusal to agree to any output freeze, and there are worries about the chances of an agreement in Algiers.