Oil prices rose
on Wednesday after Iraq and Algeria joined Saudi Arabia in supporting an
extension to OPEC supply cuts and U.S. crude inventories fell more than
expected.
But the
rise failed to recoup last week's losses with concerns about rising
output from the United States, Libya and Nigeria continuing to weigh.
The
industry group the American Petroleum Institute reported a fall in U.S.
crude inventories by 5.8 million barrels last week, which was more than
the 1.8 million-barrel slide analysts predicted.
Investors
are now waiting to see if those numbers are confirmed on Wednesday by
official figures on weekly U.S. crude and oil product inventories from
the U.S. government's Department of Energy, due out at 1430 GMT.
Global
benchmark Brent crude LCOc1 was up 68 cents at $49.41 a barrel by 1327
GMT (9.27 a.m. ET). U.S. light crude CLc1 oil was 69 cents higher at
$46.57 a barrel.
"Oil
prices are still finding it difficult to recoup the losses they
suffered last week," analysts at Commerzbank said in a note, adding the
impact on prices from the fall in U.S. inventories had been
underwhelming.
Also
supporting prices were comments from Algeria's energy minister on
Wednesday that Algeria and Iraq favor extending global supply cuts when
OPEC meets later this month.
On
Monday, Saudi Arabia's oil minister Khalid al-Falih said he expected
the output deal to be extended to the end of the year or possibly
longer.
State-owned
Saudi Aramco will also reduce oil supplies to Asian customers by about 7
million barrels in June, a source told Reuters, as part of the
Organization of the Petroleum Exporting Countries' deal to reduce
production.
Aramco had previously maintained supplies to important Asian customers.
But
questions remain about the effectiveness of OPEC-led cuts, with OPEC
member Libya saying production now exceeded 800,000 barrels per day
(bpd) for the first time since 2014 and could rise to 1.2 million bpd
later this year.
Nigeria, which along with Libya is exempt from OPEC cuts, is also expected to see a jump in output soon as Shell (
RDSa.L) tests the Trans Forcados oil export pipeline before it restarts.
Brent
and U.S. light crude futures contracts closed on Tuesday at their
second lowest levels since Nov. 29, the day before OPEC announced it
would cut output in the first half of 2017.
Prices
surged after that deal, but have come under pressure in recent weeks as
U.S. production has climbed, undermining OPEC-led efforts to balance
supply with demand.
(reuters.com)