By Georgi Kantchev and Timothy Puko 

Oil prices rallied on Friday, rebounding from a 13-year low the previous day, on speculation of production cuts among some of the world's biggest suppliers.

Light, sweet crude for March delivery recently gained $1.47, or 5.6%, to $27.68 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained $1.47, or 4.9%, to $31.53 a barrel on ICE Futures Europe.

West Texas Intermediate fell to $26.21 a barrel on Thursday, the lowest settlement since May 6, 2003. Both benchmarks are still down for the week, with Brent on track for a 7% loss and WTI down around 10%.

Prices have been rising since late trading on Thursday after The Wall Street Journal posted translated comments from the United Arab Emirates' energy minister about whether OPEC members are more open to cutting output. The minister said they are "ready to cooperate," though he also said other countries must participate, too. That has yet to happen, despite increasing talk of it in recent month.

"Every time someone comes out and says 'We're ready to cooperate,' there's always a knee-jerk reaction," to buy, said Peter Donovan, broker for Liquidity Energy in New York. "Prices have come down so far, guys don't want to get caught [selling] at the bottom."

Venezuela, meanwhile, proposed that OPEC and non-OPEC producers should at least freeze output at the current level.

"An OPEC cut is still hard to see but this week the notion of an OPEC 'freeze' was introduced and we find that easier to envisage," said Olivier Jakob of consultancy Petromatrix. According to Mr. Jakob, a freeze of OPEC production wouldn't reduce supplies to the market, but could provide a sentiment boost as it brings OPEC supply management back into the equation.

Many market watchers, however, continue to be skeptical about the chances of any agreement.

"We view this as further jawboning, with the likelihood of a coordinated response on supply cuts very low," ANZ Bank said in a report.

Prices likely would have gone up Friday even without speculation about OPEC cutting output, Mr. Donovan said. Oil traders have been betting aggressively against oil prices in recent weeks. And with markets closed for a U.S. holiday on Monday, many will want to close out those bets ahead of an extended weekend. That can cause a short-term rebound as those traders buy up contracts to close out, but wouldn't likely resolve the long-term trends pushing oil lower.

A supply glut has dragged prices down over the past two years, and top energy experts around the world have warned it shows no signs of easing in the first half of this year. OPEC's policy, led by its most influential member, Saudi Arabia, has been to pump at full tilt in a bid to defend its market share against producers in the U.S. and Russia.

U.S. oil inventories remain near levels not seen for this time of year in at least the last 80 years, according to the U.S. Energy Information Administration. With slower demand ahead due to refineries going into planned maintenance, crude stocks are expected to continue to increase.

"There is some concern that inventory tank tops will be tested, particularly in the U.S.," said Michael Wittner , oil analyst at Société Générale .

Still, analysts see some respite for oil prices in the second half of the year.

"We do believe that Brent and [WTI] prices will rebound in the second half of 2016 as more aggressive cutbacks in production are forthcoming, particularly in the U.S.," said John Davies , head of commodities research at BMI Research.

Gasoline futures recently gained 7% to $1.0074 a gallon. Diesel futures gained 5.5% to $1.0329 a gallon.

Biman Mukherji contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Timothy Puko at tim.puko@wsj.com

 

(END) Dow Jones Newswires

February 12, 2016 10:32 ET (15:32 GMT)

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