Oil prices gave up early gains on Monday, as the market weighed news from OPEC and other producers about prolonging output cuts against data showing the recovery in US drilling had extended for a year.
Speaking in Kuala Lumpur earlier Monday, his Saudi counterpart Khalid Al-Falih said he was "rather confident the agreement will be extended into the second half of the year and possibly beyond" after talks with other nations participating in the accord.
The United States, Canada and Brazil are not among producing countries including Russian Federation who meet with OPEC this month to decide whether to continue output cuts of 1.8 million barrels per day in an effort to reduce a global crude glut and support prices.
West Texas Intermediate for June delivery rose 21 U.S. cents to US$46.43 a barrel before Mr Falih's comments, and traded little changed at US$46.20 at 10.16am in London yesterday.
Global benchmark, Brent crude was up 34 cents at $49.44 a barrel, having recovered from a session low of $48.65. Opec will meet May 25 to decide whether to extend supply cuts through the second half of the year as concerns mount that its efforts to trim a global glut are being overwhelmed by rising United States supply.
"There is nearly consensus on the significance of extending the (reduction) agreement for at least six more months", Oil Minister Essam al-Marzouk, who heads a committee overseeing compliance to the cuts, said in a statement.
Oil prices on Monday rise slightly, reflecting cautious optimism among analysts.
Oil prices fell on Tuesday, surrendering earlier gains, rattled by concern over slowing demand and the rise in USA crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.
A statement by Saudi energy minister on extension of oil cut agreement will be good news Nigeria, PREMIUM TIMES can report.
Reuters reported that OPEC and its non-OPEC partners were considering an extension to the current deal, which comprises an output cut of 1.8 million barrels per day (bpd), for nine months or more. OPEC's original agreement on revised production levels was reached on November 30 previous year and always subject to review in the normal way at the organization's next scheduled ministerial conference on May 25.
"Conservative estimates predict that we will need to offset 20 million barrels per day in combined demand growth and natural decline over the next five years", Falih said.