Investing.com - Oil prices rallied sharply for the third session in a row in North American trade on Monday, hitting a fresh three-week high amid indications major oil producers are reconsidering a collective production freeze in a bid to boost the market.
According to media reports on Monday, Russia is opening up to an agreement with other major oil producers to freeze output in an effort to stabilize the market.
Alexander Novak, Russia's energy minister, said his country is consulting with Saudi Arabia and other producers to jointly cap production "if necessary," Arabic newspaper Asharq al-Awsat reported.
"We are cooperating in the framework of consultations regarding the oil market with OPEC countries and producers from outside the organisation, and are determined to continue dialogue to achieve market stability," Novak said.
On the ICE Futures Exchange in London, Brent oil for October delivery jumped to an intraday peak of $47.87, the most since July 18. It was last at $47.83 by 13:40GMT, or 9:40AM ET, up 86 cents, or 1.83%.
London-traded Brent futures surged $2.70, or 5.74%, last week, marking the best weekly gain in over four months, amid growing expectations of producer action at an OPEC meeting in Algeria next month.
Elsewhere, crude oil for September delivery on the New York Mercantile Exchange rose 88 cents, or 1.98%, to trade at $45.37 a barrel after touching a session high of $45.41, a level not seen since July 21.
New York-traded oil futures soared $2.69, or 6.04%, last week, the largest weekly gain since April.
Crude prices are up nearly 10% so far this month. Sentiment on oil received a leg up after comments from Saudi energy minister, Khalid al-Falih, late last week appeared to lend more credibility to the idea that OPEC might consider taking action to stabilize prices at a meeting in Algeria next month.
However, market players remained skeptical that the meeting would result in any concrete actions. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative.
Despite recent gains, indications of an ongoing recovery in U.S. drilling activity combined with elevated stocks of fuel products around the world is expected to keep prices under pressure in the near-term.
According to oilfield services provider Baker Hughes, the number of rigs drilling for oil in the U.S. last week increased by 15 to 396, the seventh consecutive weekly rise and the 10th increase in 11 weeks.
The continued increase in U.S. drilling activity fueled speculation that domestic production could be on the verge of rebounding in the months ahead, underlining worries over a supply glut.