Oil Steady, Heading for Weekly Gain on Supply Cut Talk

Oil was steady around $34 per barrel on Friday as hopes of a deal by major exporters to cut production faded slightly.

Crude prices were still set to end the week sharply higher as many investors think a deal to reduce the massive oversupply that has sent prices tumbling is possible.

Brent futures have jumped by around a quarter since hitting an intra-day low of $27.10 a barrel on Jan. 20. It hit a high on Thursday of $35.84.

Brent was down 4 cents to $33.85 a barrel by 1102 GMT on Friday, after gaining 79 cents, or 2.4 percent, on Thursday.

U.S. crude was up 7 cents to $33.29 a barrel, having settled up 92 cents, or 2.9 percent, at $33.22 on Thursday.

Russia's Deputy Prime Minister Arkady Dvorkovich said on Friday Russian output could decline as a result of lower investment, but the state would not intervene to balance the market.

That appeared to pour cold water on possible joint OPEC and non-OPEC production cuts mentioned by Russian Energy Minister Alexander Novak on Thursday.

However many analysts think there is still a chance of a deal.

"As the headlines fly it is difficult to be absolutely sure about each word used but we don’t read 'no meeting scheduled yet' the same as 'no meeting scheduled'," Olivier Jakob, analyst at Petromatrix in Zug, Switzerland said.

"The 'yet' is not necessarily a 'nyet' and we can therefore continue to speculate about a possible meeting."

Brent futures rallied as much as 8.2 percent after Russia said on Thursday that top OPEC producer Saudi Arabia had proposed oil production cuts of up to 5 percent.

"While we view this outcome as unlikely, a 5 percent production cut by just Saudi Arabia and Russia would be sufficient to bring the market close to balance," Jefferies said in a research note on Friday, referring to Russia's comment.

Figures from Iran underlined the fact that there is no end in sight to the glut in the market unless there is a cut in production by major exporters.

Iran's oil exports are set to rise more than a fifth in January and February from last year's daily average, data from a source with knowledge of its loading schedules shows, revealing how Tehran is ramping up sales after the lifting of sanctions.

(Additional reporting by Dmitry Zhdannikov in London, Meeyoung Cho in Seoul and Henning Gloystein in Singapore; editing by Susan Thomas and Jason Neely)