* OPEC-led oil production cut seen being extended to March
* But slowing economic growth dampens mid-term oil outlook
* OECD says quarterly GDP growth "decelerated sharply"
* Goldman Sachs warns of renewed oil glut in 2018
By Henning Gloystein
SINGAPORE, May 23 Oil prices were firm on
Tuesday on the expectation that an OPEC-led production cut would
be extended to next March, but analysts said economic slowdown
was clouding the mid-term outlook for crude markets.
Brent crude futures at 0019 GMT were up 3 cents from
their last close at $53.86 per barrel.
U.S. West Texas Intermediate (WTI) crude futures were
at $51.16, up 3 cents.
Both benchmarks have risen over 10 percent from their May
lows early this 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.
OPEC and other participating producers are due to meet in
Vienna on May 25 to discuss output policy.
"Oil prices are rebounding with stock draws and greater
certainty on an extension of the production cuts," Goldman Sachs
said in a note to clients.
"A 9-month extension would normalize OECD inventories by
early 2018, in our view, but we see risks for a renewed surplus
later next year if OPEC and Russia's production rises to their
expanding capacity and shale grows at an unbridled rate," the
U.S. bank added.
At the same time, commodities brokerage Marex Spectron said
"spot demand (for oil) remains strong, and we expect it to get
even stronger (in coming weeks)".
On the macroeconomic front, however, dark clouds appeared on
"Quarterly growth of real gross domestic product (GDP) in
the OECD area decelerated sharply to 0.4 percent in the first
quarter of 2017, compared with 0.7 percent in the previous
quarter, according to provisional estimates," the Organisation
for Economic Co-operation and Development (OECD) said on Tuesday
in a statement.
Of its major members, the OECD said growth slowed markedly
in the United Kingdom (0.3 percent, down from 0.7 percent the
previous quarter), the United States (0.2 percent growth down
from 0.5 percent), and France (0.3 percent, down from 0.5
Of the major economies, only Germany and Japan saw
accelerated growth, at 0.6 percent and 0.5 percent respectively,
up from 0.4 and 0.3 percent previously.
"Our macroeconomic view remains ... price-negative, which is
likely to affect the medium-term demand for crude oil," said
(Reporting by Henning Gloystein; Editing by Joseph Radford)