Oil Inches Back Up, OPEC Promises Support
OPEC looks set to extend output cuts through 2017; but rise in U.S. drilling undermines group's efforts.
Oil prices recovered some lost ground on Monday after big losses last week, driven by expectations that OPEC will extend output cuts till the end of 2017, although a rise in U.S. drilling capped gains.
Brent crude futures rose 38 cents by 1148 GMT to $52.34 per barrel.
U.S. West Texas Intermediate (WTI) crude oil futures added 41 cents to reach $50.03 a barrel.
Prices fell steeply last week on the back of stubbornly high crude supplies, despite a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to cut output by almost 1.8 million barrels per day (bpd) in the first half of the year.
Oil prices on Monday received a respite after a panel of OPEC and other allied producers recommended an extension of cuts into the second half of 2017, a source said.
"This no longer comes as any surprise, given that the influential Arab Gulf neighbouring states had last week already expressed support for an extension to the agreed cuts," Commerzbank said in a note.
Leading Gulf oil exporters Saudi Arabia and Kuwait gave a clear signal at a conference in Abu Dhabi last week that OPEC planned to extend the supply reduction deal.
An expected fall in Iranian production also lent markets some support on Monday, traders said.
Iran's crude oil exports are set to hit a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.
Iranian oil exports, especially to its core markets in Asia, had soared since sanctions were eased in January 2016.
But rising U.S. drilling and production has tempered the bullish sentiment, with investors cutting bullish bets on rising ICE Brent crude futures and options by 9,811 contracts to 427,433 lots in the week to April 18.
In the week to April 21, U.S. drillers added oil rigs for a 14th week in a row, to 688 rigs, extending an 11-month recovery that is expected to boost U.S. shale production in May by the biggest monthly increase in more than two years.
Since a trough in May 27, 2016, U.S. producers had added 372 oil rigs, a rise of 118 percent, Goldman Sachs said in a note.
U.S. crude production is at 9.25 million bpd <C-OUT-T-EIA>, up almost 10 percent since mid-2016, approaching the level of OPEC's top exporter Saudi Arabia.
By Ahmad Ghaddar
