NEW YORK Oil prices were volatile on Thursday, reversing earlier gains as scepticism that cash-strapped OPEC member Venezuela's effort to lobby crude producers for output cuts would succeed offset a weakening dollar.
The dollar extended its drop for a second day, making greenback-denominated commodities cheaper for holders of other currencies, with the dollar index .DXY hitting its lowest level in more than 3-1/2 months on continued scepticism that the Federal Reserve would be able to hike interest rates this year.
Speculation about possible talks between the Organization of the Petroleum Exporting Countries and other oil producers to cut output increased volatility in the oil markets.
Brent traded above $35 a barrel earlier on Thursday, adding to the previous session's 7 percent jump, after an Iranian official was quoted as saying Tehran supported a meeting, raising hopes that they could take action to support prices despite widespread scepticism in the market.
Iran's role in any potential deal to rein in production is critical, as it appears determined to boost production and gain market share after the lifting of sanctions.
Venezuelan Oil Minister Eulogio del Pino said he had a "good and productive" meeting with his counterpart from Qatar, holder of the OPEC presidency in 2016, without giving more details.
Del Pino is scheduled to meet Saudi Oil Minister Ali al-Naimi on Sunday as part of a tour of oil producers to lobby for action to prop up prices.
But so far, none of OPEC's Gulf members, including top exporter Saudi Arabia, has publicly backed a meeting.
"The market is trying to sort out whether it believes there is a meeting or not. And if there is a meeting, whether it's going to even accomplish anything," said Dominick Chirichella, a senior partner at Energy Management Institute.
"We've already been on both sides of that fence today with the rallies and the dips. The biggest single thing that's absent, though, is Saudi Arabia," he added.
By 1:11 p.m ((1811 GMT), Brent LCOc1 futures were down 25 cents, or 0.7 percent, at $34.79 a barrel, after trading between $34.15 and $35.84.
U.S. crude CLc1 was down a penny at $32.27 per barrel after swinging between $31.68 and $33.60.
Meanwhile, the 75 percent fall in oil prices since mid-2014 continued to crush major oil companies' profits.
Royal Dutch Shell RDSA.L, Europe's largest oil company, reported its lowest annual income in over a decade. The world's largest oil company, ExxonMobil (XOM.N), earlier this week announced its smallest quarterly profit in more than a decade and BP (BP.L) said its 2015 loss was its biggest ever.
(Additional reporting by Catherine Ngai in New York, Henning Gloystein in Singapore and Alex Lawler in London; Editing by Dan Grebler and Marguerita Choy)
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Updated Date: Feb 05, 2016 00:15 AM