Oil Prices: US Crude Hits 2016 High After Report That Saudi Arabia, Russia Have Agreed To Production Freeze

This story was updated at 4:15 p.m. EDT.

Global oil prices hit fresh highs on Tuesday, with Brent crude piercing $44 a barrel and U.S. crude hitting a 2016 high, extending earlier gains, after a report that top producers Russia and Saudi Arabia have agreed to freeze output ahead of a much-anticipated producers meeting on Sunday.

Russia's Interfax news agency quoted a diplomatic source in Doha saying that Russia and Saudi Arabia reached a consensus on Tuesday about an output freeze and that the final decision will not depend on Iran.

The price of U.S. crude oil futures touched a fresh 2016 high and settled up $1.81, or 4.5 percent, at $42.17 a barrel, its highest settlement price since November, the Wall Street Journal reported.

The price of Brent crude was up $1.86, or 4.3 percent, at $44.69 a barrel, also the highest level since November, the Journal said.

Oil markets were already boosted ahead of the much-anticipated meeting between members of OPEC plus outside producers in Doha, Qatar, on Sunday to discuss freezing output, but the comments fueled hopes that oil producers will agree on steps to tackle a supply glut.

Analysts and traders remained somewhat skeptical about the news, citing that while bullish players appear to be driving the market higher on a global supply-demand rebalancing, the threat of record-high inventory levels and producers bringing new oil once prices rebound continued to loom over the market.

"The market appears to be taking a lot of support from positive statements. But, this isn't the first time the Russians have come out and made remarks related to a production freeze being imminent," said Gene McGillian, a senior analyst at Tradition Energy.

McGillian added that Iran's participation in the output freeze would be crucial for a more meaningful discussion regarding supply cuts.

On the charts, the midmorning rally pushed both Brent and U.S. crude through key resistance levels at their 200-day moving averages, which stood at $43.53 for Brent, potentially putting the market on a firmer technical footing.

"If the 200-day moving average is broken, we expect to see more speculative flows coming into crude oil," said Olivier Jakob, analyst at Petromatrix.

Data from Reuters were used to report this story.