Oil rises; producers pledge output cuts ahead of meeting

The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut production by 1.8 million barrels per day for six months from January 1 to support the market.

"This should see oil prices remain well bid, as OPEC continues to talk up a continuation of the production cut agreement", it said.

Oil prices fell on Wednesday after industry data showed a surprise increase in USA crude inventories despite OPEC-led output cuts that Saudi Arabia and Russian Federation want extended.

Within OPEC, so far Saudi Arabia, Iraq, Iran, the United Arab Emirates (UAE), Kuwait, Venezuela, and Algeria have said they would support some kind of extension, or would support a rollover of the cuts if others do. That boosted oil prices immediately after the data, with U.S crude futures bouncing to a high of $49.50 a barrel before retreating modestly.

Crude prices staged a mild rally in Asia on Friday with USA crude nearing the key $50 a barrel mark ahead of weekly rig count figures expected to set the near-term tone ahead of next week's meeting of OPEC and allied producers on production cuts.

Crude-oil prices on Thursday settled modestly higher, adding to the previous session's advance as the market focused on decreasing stockpiles ahead of a highly anticipated meeting of OPEC. An extension to the OPEC deal will be the main point of conversation when the 13 member countries meet in Vienna on May 25.

The agency kept its global demand growth forecast for 2017 unchanged at 1.3 million barrels per day (bpd) due to a gradual decrease in previously active consumer markets, including the US, Germany, and Turkey.

And analysts now say USA shale production will grow even faster than expected. New (KOSDAQ: 160550.KQ - news) wells have an average break-even price between $43 and $45 a barrel in the current market, said Reed Olmstead of IHS Markit (Stuttgart: A1139A - news). US benchmark crude was up 61 cents at $49.96 a barrel.

On Monday the EIA said that production from seven major US shale plays should jump by 122,000 BPD to 5.401 million in June from the prior month.

According to OPEC's latest Monthly Oil Market Report for May, Nigeria's output was put at 1.484 million bpd for April, from 1.21 million bpd in March, which was based on direct communication. In the most recent week, USA production slipped 9 Mbbl/d to 9.305 MMbbl/d, the first decline in 13 weeks.

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