Iraq, Algeria support extension of oil production cuts

In the USA, crude stockpiles posted their biggest one-week drawdown since December last week as imports dropped sharply, while inventories of refined products also fell.

As a result, global benchmark Brent crude was up $1.24, or 2.5% at $49.97 US a barrel mid-morning Wednesday. Eastern time (1535 GMT).

But global inventories remain high, pulling crude back below $50 per barrel and putting pressure on Opec to extend the cuts to the rest of the year.

After a minor recovery, the long covering of hedge funds and investors anxious on continued supply glut has pushed that price of oil to the lowest point since before the OPEC deal last November, which aimed at reducing supplies by 1.8 million barrels per day.

Growth in the nation's auto fleet will support gasoline demand, with increasing truck sales and air travel also helping fuel consumption, it said in a report dated May 9.

Also supporting prices were comments from Algeria's energy minister on Wednesday that Algeria and Iraq will favour extending global supply cuts when OPEC meets later this month.

Crude in storage at USA facilities has fallen in recent weeks, but stockpiles remain near all-time highs.

Market watchers are anticipating production and inventory levels published late in the day by the American Petroleum Institute.

US West Texas Intermediate (WTI) crude futures were at $47.57 per barrel, up 24 cents, or 0.5 per cent from the last settlement.

USA oil production has risen more than 10 percent since mid-2016 to 9.3 million bpd, the highest since August 2015 and close to the levels of top producers Russian Federation and Saudi Arabia.

High U.S. gasoline stocks have fed concern about demand in the United States, where consumer spending expectations hit a three-year low last month and vehicle sales have fallen year-on-year for four months in a row.

Saudi Aramco will curb oil supplies to Asia by about 7 million barrels in June, a source with direct knowledge of the matter said. Two OPEC members are exempt from the cut-Nigeria and Libya- and a third member, Iran, was allowed to boost output to a specified level.

"There is a general belief that OPEC will leave its quota system in place", said Tamas Varga, an analyst at PVM Oil Associates London.

The cartel abandoned its traditional strategy of limiting supply to support prices between 2014 and 2016, stepping up production and causing a plunge in prices to under $30 per barrel as they sought to squeeze out higher cost U.S. shale producers.

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