Prices remained on track for a weekly gain on hopes for a deal between major exporters to cut production and reduce one of the biggest oil supply gluts ever. Brent hit as high as $35 a barrel, up about 25 percent from 12-year lows hit last week.

Oil retraced some early gains and briefly turned negative, after the Wall Street Journal reported that an Iranian oil official said the country would not join an immediate OPEC production cut. The paper said Iran wants to boost crude exports by 1.5 million barrels a day.

Russia, a major non-OPEC producer, this week said it could cooperate with the Organization of the Petroleum Exporting Countries on production curbs, something it had been refusing to do for 15 years.

Brent March futures, which expires on Friday, rose 67 cents or 2 percent to $34.56 a barrel by 1:15 p.m. EST (1815 GMT). On Jan. 20, the contract hit its lowest since 2003 at $27.10 a barrel.

U.S. crude rose 33 cents to $33.55 per barrel, a 1.0 percent gain, having hit a high of $34.40.

Russian Deputy Prime Minister Arkady Dvorkovich said on Friday the country would not intervene to balance the market. His comments fed growing doubts about a possible deal mentioned the previous day by Energy Minister Alexander Novak.

But a few hours later, Russia's foreign ministry said veteran minister Sergei Lavrov, who almost never comments on oil policies, would visit the UAE and Oman to discuss oil markets.

"The market has rewarded these statements about the possibility of a deal, even though I think it's ridiculous," said John Kilduff, partner at Again Capital LLC in New York.

He noted that Iran and Iraq were determined to boost production, and were unlikely to come together with Saudi Arabia to cut OPEC output. The Saudis have made no statement on a deal,

"This is a rally on false hopes, unfortunately"

Oil prices also drew support from weak U.S. GDP data that raised hopes the Federal Reserve may slow any planned interest rate hikes.

Some analysts said oil prices may have found a bottom and could rally as high as $45 by year-end if non-OPEC supply is reduced and global demand improves.

U.S. oil production fell in November for the second straight month, the Energy Information Administration said.

U.S. shale producers this week slashed 2016 capital spending plans more than expected, with one saying prices would need to rise more than 20 percent to turn a profit.

Energy firms in the United States cut oil rigs for the sixth straight week and were expected to shed more, oil services company Baker Hughes Inc said.

"With more energy companies announcing cuts and OPEC contemplating a cut, it looks like oil is forming a bottom," said Phil Flynn, an analyst at Price Futures Group in Chicago.

"Now the question becomes how high can they go. The charts look like a test near $40 is on the cards."

(Additional reporting Simon Falush and Dmitry Zhdannikov in London, Meeyoung Cho in Seoul and Henning Gloystein in Singapore; Editing by Marguerita Choy and David Gregorio)

By Devika Krishna Kumar