Oil prices dip after rally on talk of output cuts

London - Oil prices dipped on Friday following a rally sparked by the prospect of possible cuts to crude output.

Around 12:00GMT, US benchmark West Texas Intermediate for delivery in March was down three cents at $33.19 a barrel.

Brent North Sea for March eased 18c to $33.71 a barrel compared to Thursday's close.

Gains and losses

Prices have crashed by about three quarters since mid-2014 owing to a supply glut and weaker demand growth for crude, as well as a strong dollar that makes commodities priced in the US currency more expensive for holders of weaker units.

In recent days, trading has been very volatile, with oil prices swinging between gains and losses.

They surged on Thursday after Russian reports that Energy Minister Alexander Novak had said Moscow was ready to take part in talks with Opec to establish possible "co-ordination".

The minister alleged that Opec heavyweight Saudi Arabia had proposed that oil-producing countries, including non-Opec Russia, cut production by up to 5%, a prospect he said would be discussed at an upcoming meeting.

Novak's statement led to the highest jump in oil prices in three weeks.

Phillip Futures analyst Daniel Ang said the price rally had been owing also to a fall in the dollar after US data showed a steep 5.1% fall in new orders for manufactured goods in December.

That was far worse that analysts expected and underlined the weakness in the manufacturing sector of the world's biggest economy and top oil consumer.

Continue to suffer

Ang meanwhile stressed that nothing "concrete has been struck yet" regarding possible cuts to output.

A Russian deputy prime minister said Friday that oil companies - and not the state - should decide whether to cut production in the face of low oil prices due in part to a supply glut.

"If prices remain at non-profitable levels for an extended period, investments will have to be corrected and this will lead to lower production, but this will not be in the interest of the state," Russian news agencies quoted deputy prime minister Arkady Dvorkovich as saying.

Low oil prices have weighed heavily on Russia's recession-hit economy, which shrank by 3.7% in 2015 and is set to continue suffering this year.