Kuwait adds to growing consensus on OPEC oil output deal extension

Oil hit its highest in more than three weeks on Monday, topping US$52 a barrel after Saudi Arabia and Russian Federation said that supply cuts need to last into 2018, a step towards extending an OPEC-led deal to support prices for longer than first agreed.

Brent crude, the global benchmark, had risen $1.50 to $52.34 a barrel by 1152 GMT and traded intraday at $52.52, the highest since April 24.

The current agreement that started on 1 January effectively cut oil production by Opec and non-Opec countries by nearly 1.8 million barrels per day (bpd), but that has not helped crude futures move above the $50 per barrel levels.

The Kuwaiti minister said there were already positive signs emerging to support stronger crude oil prices, days before parties to the agreement meet in Vienna to consider a formal extension.

OPEC began production cuts on January 1 in a bid to reduce swollen global inventories and bolster the price of oil, which is still stuck at half its 2014 level. If you are an oil producer, you can't drive up demand, but you can throttle back on output in the hope of pushing up the price of your commodity.

"We are of the camp that the extension cuts might not be enough - they might need to extend the cuts and to increase them to stabilize this market", said Oliver Sloup, director of managed futures at iitrader.com. "Year-to-date compliance with production cuts remained robust at 96 percent", said the report.

The Persian Gulf state chairs a monitoring committee, including Algeria and Venezuela and non-OPEC members Russian Federation and Oman, which will keep an eye on crude oil production from OPEC and non-OPEC producers to ensure compliance with the November deal to reduce output.

Supply and demand in the oil market are close to matching up, the IEA said today, but rising United States supply could mitigate landmark OPEC-led production cuts. The May 25 meeting is when a final decision will be made on the nine-month extension.

Supplies of gasoline probably dropped 1 million to 240 million barrels while inventories of distillate fuel, a category that includes diesel and heating oil, slipped 1.25 million to 147.5 million barrels last week. US output has risen more than 10% since the middle of past year, and data released on Friday by oil services firm Baker Hughes showed that the number of active rigs across the country rose for the 17th week in a row.

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