Oil has pared its early day losses today after Russia again showed a willingness to enter into a dialogue with OPEC (the Organisation of Petroleum Exporting Countries). The statement came after oil slipped below $30 per barrel yesterday, causing a turmoil across the world markets.

Nothing happened last time

It is to be noted that Russia had made similar statement few days back, but such reassurance failed to solidify. Now, Russian Foreign Minister, Sergei Lavrov, has yet again indicated that they are open to talk about oil output cuts if both OPEC and non-OPEC members agree. The hint coming from one of the largest producers of oil left a positive impact on the oil market, which witnessed an upswing following a slide during early trading hours today.

The Brent Crude (ICE) for April delivery was seen trading higher by 1.59% at $33.24 while the WTI Crude Oil added $0.48 to trade at $30.36.

Oil oversupply needs to be solved

According to analysts, there is an urgent need to address the oil glut scenario as the oil slide by nearly 70% over the last one and a half year has already done damage to oil-exporting nations such as Venezuela, Nigeria, Russia and other Gulf countries. Meanwhile, U.S. is also battling with higher oil stock reserves as its reserves increased to 500.4 million, up by 3.8 million barrels during the week ended on January 20, as per a report from the American Petroleum Institute.

Amidst the disruption in the global oil market, analysts at Morgan Stanley believe that balance between oil supply and its demand will not reach a balance until the middle of 2017. The research firm added that capex cuts alone will not bring rebalance, but action needs to be taken in containing the production as well.

Going ahead, it will be seen if Russia’s initiative will get a similar response from the OPEC nations, particularly Saudi Arabia, which has been adamant about maintaining the output. The market is hoping that Russia’s statement, this time, is legitimate.