Oil prices rise as OPEC considers extending cuts
Global crude benchmarks staged a recovery on Tuesday on reports production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) could be extended.
North Sea Brent crude was trading 45 cents higher, slightly above $52 per barrel, while US West Texas Intermediate gained 38 cents, trading at $48.60.
The oil cartel, together with other producers led by Russia pledged to cut output by almost 1.8 million barrels per day (bpd) between January and June to boost oil prices and shorten global oversupply that has been on the market for three years.
On Friday, Energy Minister Aleksandr Novak said Russia will cut oil production by 300,000 barrels per day (bpd) by April, in accordance with the agreement.
At present, the country has cut its production by 160,000 bpd and will have cut 200,000 by the end of March.
However, the cuts by OPEC and Russia have been undermined by strong drilling data from the United States.
US drillers added 14 oil rigs in the week to March 17, according to Baker Hughes. At 631 rigs, this is the biggest count since September 2015.
The US shale oil industry is also recovering. It is expected to see the biggest increase in production in six months in April.
Traders have said healthy oil demand would still help rebalance markets.
"Global demand for 2017 is expected to remain healthy and surpass long-term average growth in demand of 1.2 million barrels per day by between 0.2 and 0.4 million bpd. As such, the combination of robust demand and weaker global supply leading to rebalanced markets will not be de-railed by US shale oil," said Jeremy Baker, senior commodity strategist at Vontobel Asset Management, as quoted by Reuters.
