BENGALURU: Oil prices rose 2% on Thursday after dropping to near 15-month lows earlier in the session, supported by reports that top producers Saudi Arabia and Russia met to discuss ways to enhance market stability.

Brent crude futures rose $1.61, or 2.2%, to $75.30 a barrel by 1:08 p.m. EDT (1708 GMT).

West Texas Intermediate crude futures (WTI) rose $1.53, or 2.3%, to $69.14 a barrel.

Earlier in Thursday’s session both contracts had dropped by more than $1 a barrel to near 15-month lows. On Wednesday, the third straight day of declines, US crude fell below $70 a barrel for the first time since Dec. 20, 2021.

Saudi state media reported that the country’s energy minister Prince Abdulaziz bin Salman and Russian deputy prime minister Alexander Novak met in the Saudi capital to discuss the OPEC+ group’s efforts to maintain market balance.

“That news woke up the bulls in the market, and it was kind of expected with the sell-off that we have seen over the past few sessions,” said John Kilduff, partner at Again Capital.

Oil prices were also supported by a broader recovery in financial markets after Credit Suisse was thrown a lifeline by Swiss regulators, and Treasury Secretary Janet Yellen assured lawmakers that the US banking system remains sound.

The US dollar weakened on Thursday, making greenback-denominated oil cheaper for holders of foreign currencies and boosting demand.

Both OPEC and the International Energy Agency (IEA) have forecast stronger oil demand this week, but oversupply concerns continue to weigh on the market.

The IEA said commercial oil stocks in developed OECD countries had hit an 18-month high while Russian oil output in February stayed near levels registered before the war in Ukraine, despite sanctions on its seaborne exports.

“Market sentiment remains fragile as investors continue to weigh up the latest developments in the banking sector both in the US and in Europe,” said Fiona Cincotta, Senior Financial Markets Analyst at City Index.

The ECB’s decision to hike interest rates, as expected, also weighed on oil prices.

Oil trading will continue to be volatile, especially if other central banks persevere with rate hikes, said Craig Erlam, analyst at OANDA.

“Authorities may have thrown their support behind the banking sector while managing the collapse of the mid-tier institutions in the US but traders are far from convinced that the worst is behind us,” Erlam said.—Reuters