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Crude oil prices rose on Monday, reversing earlier losses, after the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members said they were considering extending their existing supply deal possibly into 2018, which helped offset the bearish impact of more increases in United States crude out output.
Global benchmark, Brent crude was up 34 cents at $49.44 a barrel, having recovered from a session low of $48.65.
US light crude was up 35 cents at $46.57 a barrel, up from an intraday low of $45.83.
Reuters reported that OPEC and its non-OPEC partners were considering an extension to the current deal, which comprises an output cut of 1.8 million barrels per day (bpd), for nine months or more.
However, efforts of OPEC to reduce global oil inventories have been undermined by a surge in US drilling, which has knocked more than 10 per cent off the price of oil in the last month.
OPEC will meet on May 25, when it is expected to discuss prolonging the cuts to the end of 2017, although analysts say a further extension may not be enough.
Data from the InterContinental Exchange yesterday showed investors had cut their bullish bets on Brent to the lowest level since late November, according to Reuters.
Russia said yesterday it was discussing prolonging cuts with other producers beyond 2017, without giving a clear timeline.
Saudi Arabia’s Energy Minister, Khalid al-Falih, also talked of extending curbs beyond 2017.
But countering those efforts, US drillers added oil rigs for a 16th week in a row last week, extending a drilling recovery into a 12th month, energy services firm Baker Hughes Inc said last Friday.
Since a low point in May 2016, US producers have added 387 oil rigs, or about 123 per cent, Goldman Sachs said.
US crude oil output averaged 9.3 million bpd in the week ended April 28, its highest since August 2015, according to federal data.
Oil prices had recently collapsed to their lowest since late November as investor worried about the world’s stubbornly persistent glut of crude erased most of the gains that followed last year’s OPEC’s output cut.
The slide had worsened after OPEC delegates downplayed the chance that their group and other producing countries would deepen their output cuts when they meet on May 25.
The delegates had initially hinted that the current output cuts were likely to be extended, forcing both crude oil contracts to slide to their lowest since November 30, the day OPEC agreed to cut supply.