Oil prices edge up in anticipation of extended crude output cut

OPEC meets on May 25 to decide whether to extend the cuts.

In December 2016, OPEC and non-OPEC producers reached their first deal since 2001 to curtail oil output jointly and ease a global glut after more than two years of low prices.

Oil prices have increased due to reports that Saudi Arabia may reduce crude exports to offset the impact of rising U.S. output, which is preventing the market from restoring stability. div class="rightpullquote" "Industry group American Petroleum Institute reported that crude prices also gained support by the fall in United States inventory, a 5.8 million barrel decline".

OPEC on May 11 sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage US shale drillers to pump more, hampering OPEC efforts to clear a glut and support prices by cutting its output. US light crude oil was $1.28, or 2.8% higher at $47.16 USA a barrel.

Saudi Arabia is still pumping well below the level it agreed to in November, when OPEC agreed to reduce its combined oil output by 1.2 million bpd in order to shrink huge global stockpiles and balance an oversupplied market.

Brent crude futures, the worldwide benchmark for oil prices, were at $50.33 per barrel at 0039 GMT on Thursday, up 11 cents, or 0.2 percent, from their last close.

The oil price has bounced back above $50 after fears about over-supply sent it plunging last week.

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Saudi Arabia notified several Asian refiners of its first cuts in crude allocations since OPEC's output reduction took effect in January.

Brent crude has endured a volatile past few years, plummeting from more than $100 a barrel in 2014 to less than $30 last year.

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 OPEC's deal to reduce production.

"It is all about sentiment and perception", said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.

Brent and USA light crude closed at their second lowest levels since November 29, 2016 the day before OPEC announced it would cut output in the first half of 2017. "The perception is that OPEC cuts are finally working".

USA crude production has risen by over 10 percent since mid-2016 to 9.3 million bpd, close to the output of top producers Russian Federation and Saudi Arabia.

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