Source:Reuters Published: 2017/3/21 18:43:51
Oil prices rose on Tuesday on expectations that an OPEC-led production cut to prop up the market could be extended, while strong demand would also work to slowly erode a global fuel supply overhang.
Brent crude, the international benchmark for oil, was up 42 cents at $52.04 per barrel at 5:07 pm Beijing time, rebounding from last week's three-month low of $50.25 but well below January's surge above $58 in the wake of the output cuts. US West Texas Intermediate crude rose 38 cents to $48.60.
The Organization of the Petroleum Exporting Countries (OPEC), together with other producers including Russia, has pledged to cut its output by almost 1.8 million barrels per day (bpd) between January and June in an effort to prop up prices and rein in a global supply glut that has dogged markets for almost three years.
Yet so far the cutback has not had the desired effect as compliance has been patchy and because other producers, including the US, have stepped up to fill the gap.
To halt the decline, OPEC members increasingly favor extending the pact beyond June to balance the market, sources within the group said.
Traders also said that healthy oil demand would help rebalance markets and support prices.
"Global demand for 2017 is expected to remain healthy and surpass long-term average growth in demand of 1.2 million barrels per day by between 200,000 and 400,000 bpd," said Jeremy Baker, senior commodity strategist at Vontobel Asset Management.