As reported previously, oil prices started the day off sharply lower with WTI and Brent sliding, with the former sliding below $50 for the first time in more than a year amid traders fear OPEC won’t act decisively next week to clear a resurgent surplus in the global crude market. Despite headlines that both Saudi Arabia and Nigeria were confident about OPEC succeeding in stabilizing prices, on Wednesday Russian President Putin poured cold water on the prospects for a deal. He said that Brent prices around $60 per barrel are “absolutely fine” for his country, suggesting limited motivation to make an output cap deal at December 6’s OPEC meeting. Later in the session, US crude oil inventories jumped more than expected, increasing by 3.6 million barrels. That was the 10th consecutive weekly inventory build, the longest such streak in three years.

However, shortly after 7am ET oil spiked sharply, rising briefly above $51 on a Reuters report that Russia may be willing to relent after all, as it was "becoming increasingly convinced it needs to reduce oil output in tandem with OPEC" but does not want to reduce output "by much" and was still bargaining with Saudi Arabia over the timing and volume of any reduction.

According to the Report, the Russian Energy Ministry held a meeting with the heads of domestic oil producers on Tuesday, ahead of a gathering in Vienna of the Organization of the Petroleum Exporting Countries and its allies on Dec. 6-7.

“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” said one source familiar with the talks between Russian oil firms and the ministry.

The Reuters source added that "most people agreed that we cannot reduce immediately, it needs to be a gradual process like last time."

As a reminder, back in 2016 Moscow agreed to curb output by 300,000 barrels per day, or one sixth of the overall cut of 1.8 million bpd, but Russian companies took several months to reach that level of reduction.

According to Reuters, if Russia bore the same proportion of such cuts as it did under the existing agreement, its share of the reduction would amount to 166,000 bpd. "It was also said that reducing by one sixth this time is a big ask," the source said.

A second source briefed on the discussions said: “We need to reduce but would not want to reduce by much.”

Russia and Saudi Arabia are expected to hammer out an agreement with Russian President Vladimir Putin meets Prince Mohammed in Argentina at this weekend’s G20 summit, which Trump is also to attend. Complicating any decision at next week’s talks is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul last month. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.

Further complicating matters is that both Saudi Arabia and Russia are now pumping a record amount of oil, with neither side willing to concede market share, although should WTI dip below $50 again it is likely that one or both sides will blink.