* Saudi, Russia said Monday cuts need to be extended to
* Analysts warn that rising supplies elsewhere undermine
* U.S. output has soared 10 pct since mid-2016 to 9.3
* Production in Libya, Nigeria is also recovering from
By Henning Gloystein
SINGAPORE, May 16 Oil prices rose on Tuesday,
extending gains after a joint announcement by top producers
Saudi Arabia and Russia to push for an extension of supply cuts
until the end of March 2018.
Brent crude futures were at $52.05 per barrel at
0129 GMT, up 23 cents, or 0.44 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were
at $49.10, up 25 cents, or 0.51 percent from their last
In order to rein in a glut, Saudi Arabia and Russia said on
Monday that they agreed the need for a 1.8 million barrels per
day (bpd) crude supply cut to be extended for nine months, until
the end of March 2018.
However, there is no final deal yet despite the pledge by
Saudi Arabia - the world's top exporter and de-facto leader of
the Organization of the Petroleum Exporting Countries (OPEC) -
and top producer Russia, as the 12 remaining OPEC members and
other producers participating in the cuts have to agree to the
extension during a meeting on May 25.
"The pressure is now on officials to deliver on these
pledges," said James Woods, global investment analyst at
Australia's Rivkin Securities.
Woods also said that oil supplies would likely remain
plentiful despite an extended cut.
"As we have seen over the past six months, rising U.S.
production and record inventories have kept upside limited and a
nine month extension at this stage is unlikely to break that,"
U.S. bank Goldman Sachs said the deal "will likely further
extend the oil price rebound... although the rally so far... has
remained modest compared to the move that occurred last year
when the OPEC cuts were first announced."
Prices are up by 2.3 percent since the announcement of the
planned extension on Monday, compared with an over 15 percent
jump in the two days following the announcement of the initial
cut on November 30, 2016.
Goldman said that beyond the ongoing rise in U.S. oil
production, which is up over 10 percent since mid-2016 to 9.3
million bpd C-OUT-T-EIA, there was also an increase in output
from within OPEC by members who were exempt from the cuts, or
where forceful disruptions had ended, including Libya and
The bank said that "these combined volumes could largely
offset the benefit of the extended cuts."
Goldman retained its average Brent price forecast for the
third quarter of 2017 steady at $57 per barrel.
(Reporting by Henning Gloystein; Editing by Richard Pullin &