By Scott DiSavino
NEW YORK (Reuters) - Oil prices rose 1.5 percent on Wednesday as the market focused on the possibility that the world's top producers would agree on an output freeze.
Trade was choppy as some traders eyed U.S. oil inventory data due late Wednesday and Thursday morning for clearer direction.
Brent futures rose 72 cents to settle at $47.98 a barrel after trading between $46.97 and $48.10.
U.S. crude traded between $44.55 and $45.58 before finishing 67 cents higher on the day at $45.50. That was a third day of gains in a row for the U.S. futures.
Oil hit a one-week high on Monday after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market. Prices have since fallen due to uncertainty over a deal, particularly after a meeting in Doha in April among the world's largest producers to discuss output ended in failure.
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"The market continues to be reactive to the claims of cooperation of OPEC and Russia, giving them tremendous benefit of the doubt on their talk of potential coordination," said John Kilduff, partner at Again Capital LLC.
The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss an output freeze at informal talks in Algeria on Sept. 26-28.
"I think we’re going to be headline driven for a while. Generally, I think we’ll see lower prices going forward. The upcoming meeting isn’t going to do very much. If OPEC freezes at these levels, these are record levels," said Tariq Zahir, analyst at Tyche Capital Advisors.
Iran has said it would cooperate on a freeze only if fellow exporters recognized its right to boost market share to levels reached before the imposition of nuclear-related sanctions, which have now been lifted.
"Iran is still talking about pre-sanction numbers and even with the production freeze, you’re still at such a high level," Zahir said.
U.S. crude inventories likely grew by about 200,000 barrels last week after rising for two straight weeks, a Reuters poll showed on Tuesday. [EIA/S]
Some analysts, however, forecast a decline in crude oil inventories related to facility evacuations in the Gulf of Mexico due to storm activity last week.
The American Petroleum Institute releases its weekly oil data on Wednesday at 4:30 p.m. EDT, while the government releases its report on Wednesday at 11 a.m., both delayed by Monday's Labor Day holiday.
(Additional reporting by Amanda Cooper in London, Osamu Tsukimori in Tokyo, Catherine Ngai in New York; Editing by Marguerita Choy)