SINGAPORE May 22 Oil prices rose on Monday,
supported by reports that an OPEC-led supply cut would not only
be extended into next year but might also be deepened in order
to tightening the market and prop up prices.
Brent crude futures were up 25 cents, or 0.5
percent, from their last close at $53.86 per barrel at 0035 GMT.
U.S. West Texas Intermediate (WTI) crude futures were
back above $50 per barrel, trading at $50.62, up 29 cents or 0.6
Both benchmarks have risen more than 10 percent from their
May lows early in the month.
Prices have been lifted by expectations that a pledge by the
Organization of the Petroleum Exporting Countries (OPEC) and
other producers, including Russia, to cut supplies by 1.8
million barrels per day (bpd) would be extended to March 2018,
instead of covering just the first half of this year to March
"Crude oil prices continued to trend higher as the market
becomes increasingly confident that OPEC members will commit to
a rollover in the production cut agreement," ANZ bank said in a
note on Monday.
The option of deepening the production cut was also being
discussed ahead of a meeting of OPEC and its allies in Vienna on
May 25 to decide their output policy, sources said.
Despite this, James Woods, investment analyst at Australia's
Rivkin Securities, said "the potential for deepening cuts
remains limited... (as) officials are likely to monitor the
impact of an extension of the cuts before they resort to such
Woods said, however, that a deeper cut may be required to
rein in oversupply.
This is because soaring output from the United States has
undermined OPEC's efforts to tighten the market.
Goldman Sachs said in a note late on Friday that "the U.S.
oil rig count continued its surge (last week)," and that the rig
count had added 404 oil rigs since May last year, a rise of 128
U.S. oil production C-OUT-T-EIA has already risen by 10
percent, or almost 900,000 bpd, since mid-2016 to 9.3 million
(Reporting by Henning Gloystein; Editing by Joseph Radford and