UPDATE 9-Oil soars towards $34 on possible production cuts

(Adds details, quote, updates prices)
NEW YORK, Jan 28 (Reuters) - Oil soared on Thursday after a
Russian official said Saudi Arabia had proposed that
oil-producing countries cut output by up to 5 percent each amid
a massive supply glut in the world market that has depressed
prices for a year and a half.
The comments initially sent Brent crude LCOc1 up more than
8 percent to almost $36 a barrel and U.S. crude CLc1 up nearly
8 percent, cresting just below $35.
The price gains later moderated a little, and as of 10:09
a.m. EST (1509 GMT), Brent LCOc1 futures for March delivery,
two days ahead of expiry, were up $1.50, or 4.5 percent, at
$34.60 a barrel. U.S. crude CLc1 was up $1.39, or 4.3 percent,
at $33.69 per barrel.
Russian Energy Minister Alexander Novak announced the
proposed cuts on Thursday. The reduction would amount to about
500,000 barrels a day of cuts by Russia, a major non-OPEC
producer.
If implemented, the output reductions could help ease a
supply glut that has caused oil prices to fall more than 60
percent since mid-2014. Prices hit their lowest level for more
than 12 years last week.
Novak said on Thursday that it was reasonable to discuss the
situation on the oil market and that OPEC was trying to organise
a meeting with other producers next month.
Also supporting the price surge were comments by a senior
Gulf OPEC delegate that Gulf countries and Saudi Arabia are
willing to cooperate on any action to stabilize the oil market.

The market has rallied over the past three days on the
possibility that OPEC and non-OPEC producers could come together
for a coordinated production cuts to offset oversupply.
But analysts and market watchers have been skeptical, saying
it was unlikely a deal would emerge, as Iran, which has boosted
oil exports after the lifting of sanctions, looks to recover its
market share.
"It's technicals controlling this market. Then you get the
fundamental news that comes out, scares the market, the shorts
jump and that's when you see $35 being tested," said Bill
Baruch, senior market strategist at iitrader.com in Chicago.
Short covering has been a major driver of the recovery in
oil prices from the lows they hit last week, after speculators
unwound some of the record-high bearish positions they had
racked up over the last six months. CFTC/