Oil futures spiked on Monday (10 October), after Russian President Vladimir Putin signalled his intention to join Opec's planned oil production cap.
Addressing the World Energy Congress in Istanbul, Putin said: "Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same. In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.
"We support Opec's recent initiative to cap output and think that at the Opec meeting in November this idea will materialise in a specific agreement, giving a positive signal to the markets and investors."
At 4:11pm BST, the Brent front month futures contract was up 2.46% or $1.28 at $53.21 per barrel, while the West Texas Intermediate was 2.87% or $1.43 higher at $53.21 per barrel.
Fawad Razaqzada, market analyst at Forex.com said Putin's comments had taken the market by surprise. "I think the Opec and Russia have recognised that sentiment on the oil market is turning bullish and they want to keep that momentum going by committing to what the market is demanding: production cuts.
"Major oil producing nations like Russia know how punishing the markets can be, so they may well succumb to pressure and actually reduce supply this time around because failure to do so would be disastrous. They have talked the talk, now it is time to walk the walk if they are committed to keeping oil prices north of $50 a barrel."
OPEC agreed to limit its production to a range of 32.5m to 33m barrels per day (bpd) on 28 September, but will only spell out the nature of the cuts on 30 November at its next meet. Given the recent history of oil producers not respecting agreements, analysts at Morgan Stanley urged caution, saying the direction oil inventories would dictate near-term market direction.
"Oil market rebalancing is still a slow and uncertain process, typically traveling 'two steps forward, one step back'. In July and August, we witnessed several disappointing demand figures, moving rebalancing back into the future. However, aggregation of all available global inventory data suggests draws since May. In tandem with Opec's recent announcement, rebalancing is being pulled back again."
Away from the oil market, precious metals also staged a recovery run. At 4:47pm BST, Comex gold futures contract for December delivery was up 0.68% or $8.50 to $1,260.40 an ounce, with the US market experience a Columbus Day holiday lull.
However, FXTM research analyst Lukman Otunuga said, "In this period of renewed US rate hike hopes, sentiment remains bearish towards gold with further declines expected as the dollar strengthens. From a technical standpoint, previous support around $1,270 could transform into a dynamic resistance which encourages a further decline towards $1,240."
Elsewhere, Comex silver was up 1.70% or ¢30 to $17.68, but spot platinum extended the previous session's decline sliding 0.11% or $1.09 to $966.90 an ounce.