NEW YORK (Reuters) - Oil rebounded from the week’s lows to close above $50 a barrel on Thursday, on growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production.
Both Brent and U.S. benchmarks rallied after the former secretary general of the Organization of the Petroleum Exporting Countries made comments supportive of non-member production cuts. The benchmarks remain more than $1 below the highs reached Dec. 5 in the wake of the OPEC deal.
Brent settled up 89 cents, or 1.7 percent, at $53.89 a barrel. U.S. light, sweet crude settled up $1.07, or 2.2 percent, at $50.84 a barrel.
Oil producers will meet in Vienna on Saturday to see if non-OPEC countries will cut production to reduce a global supply glut that has pressured prices for more than two years.
At a conference in New York, former OPEC Secretary General Abdalla El-Badri said a non-OPEC production cut of about 600,000 barrels per day (bpd) was “a must.”
OPEC has agreed to slash production by 1.2 million bpd in the first half of 2017, a deal that bolstered crude futures despite doubts over whether the amount was enough and whether the cuts would be effectively implemented.
“There will be a significant amount of slippage in the amount of cuts that occur as we get into first part of 2017,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Russia, which is not an OPEC member, has signaled it was ready to cut production by 300,000 bpd and on Thursday Azerbaijan said it would come to Vienna armed with proposals for its own reduction.
Given the rally to $50 a barrel, non-OPEC members may not be persuaded to cut output, said Tim Evans, energy futures specialist at Citigroup.
“Further effective cooperation between oil producers seems unlikely in our view, as OPEC and Russia have already agreed on policy, reducing the leverage they have with other countries in our view,” he said in a note.
Iran’s President Hassan Rouhani said on Thursday that OPEC members should work with non-OPEC nations to implement the deal reached last month, according to Iran’s state TV.
Late Thursday morning, Brent flipped into negative territory while U.S. prices pared gains briefly on reports that Russia saw a risk that the meeting could be moved due to questions that have come up. A Russian energy ministry spokeswoman, however, said the meeting would continue as planned.
Additional reporting by Sabina Zawadski and Christopher Johnson in London, Jane Chung in Seoul and Keith Wallis in Singapore; Editing by David Gregorio and Richard Chang