Oil prices increased on Monday after major producers Russian Federation and Saudi Arabia said that they are willing to support extending oil production cuts into the first quarter of 2018.
A proposal to extend an Opec and non-Opec supply cut for nine months is a positive idea, sources familiar with Iranian thinking said, suggesting Opec's third-largest producer is likely to go along with such a plan if there is a consensus.
"As we have seen over the past six months, rising United States production and record inventories have kept upside limited and a nine month extension at this stage is unlikely to break that", he said.
Benchmark futures prices for US crude rose 3.2% on the news to trade at $49.41 a barrel by 0800 Eastern Time, while shares in big shale oil and gas companies such as and Whiting Petroleum were also higher.
Brent crude futures were at $52.05 per barrel at 0129 GMT, up 23 cents, or 0.44 percent, from their last close.
Oil prices extended gains on Tuesday after top producers Saudi Arabia, Russia and Kuwait supported prolonging supply cuts until the end of March 2018 in a bid to drain a global glut.
"Our nations agreed to extend the deal up to the end of March 2018 with the same volume of allocations, which was included in the agreement from December 10", he said.
"That said, we are sceptical about Russia's willingness to actively participate in any extended cuts."The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut output by 1.8 million barrels per day in the first half of 2017, with a possible six-month extension".
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Also, they hoped that additional producers would join them in cutting when the extension begins in June.
While the curbs by producers are working, "we are not where we want to be" in bringing global inventories down "gently" below the five-year average, Al-Falih said.
OPEC meets on May 25 in Vienna to discuss the cuts, Oil Prices will be looking to that meeting. Since November, when cuts were announced, American production has jumped more than 600,000 barrels per day, and it's showing no signs of slowing down. Oil has surrendered about half its gains since their accord late past year.
The feature in the marketplace early this week is a continuation of the recent rally in the crude oil market.
The contracts closed 98 cents and $1.01 higher Monday, buoyed by Saudi Arabia and Russian Federation saying they were willing to do "whatever it takes" to bring global oil inventories back to their fiveyear range.
In its monthly report last week, OPEC said that global markets are still suffering from oversupply and it appealed to other producers, including the USA, to stop pumping so much.
In this series, we'll focus on some bullish and bearish drivers of oil prices. "However, we'll see whether the rebound remains until the USA market opens".
Despite this, crude prices had not moved much above $50 per barrel in the first months of 2017, as markets remain well supplied, leading to the extension.