Oil falls back after jumping on hopes of Russia, OPEC cooperation

US crude dips to $31.97, while Brent eases 26 cents to $32.84

US crude futures dropped more than 1% in Asian trading on Thursday, paring gains of nearly 3% made in the previous session after Russia held out the possibility of cooperating with OPEC to control global oversupply.

But falls were curbed by a weaker dollar following the Federal Reserve's decision to keep its overnight interest rate unchanged and the release of a statement suggesting it was re-evaluating the pace of future hikes.

US crude had declined 33 cents to $31.97 a barrel by 0112 GMT. It settled the previous session up 85 cents at $32.30 a barrel, a 2.7-% gain.

Brent crude had eased 26 cents to $32.84, after ending up 4.1 % at $33.10 a barrel.

Russian officials have decided they should talk to Saudi Arabia and other OPEC countries about output cuts to bolster oil prices, the head of Russia's pipeline monopoly said on Wednesday.

The Energy Information Administration said on Wednesday that US crude inventories rose by 8.4 million barrels last week, higher than analyst expectations for a rise of 3.3 million barrels. That brought crude inventories to the highest level since the EIA began tracking the data.

But crude stocks at the Cushing, Oklahoma, delivery hub fell by 771,000 barrels, which supported oil prices. 

"Overall inventories rose by 8.38 million barrels. This helped to narrow the spread between Brent and WTI overnight," ANZ said in a note on Thursday.

On the outlook for the global upstream sector this year, Wood Mackenzie said in a report: "As companies re-shape their portfolios for the lower oil price environment, exploration spend will be hit hard, to less than half of the 2014 peak."

Wall Street stocks and the dollar fell on Wednesday after the Fed left rates unchanged.