Oil prices have improved after a report stated that OPEC may extend the output-cut deal to reduce the global crude oversupply.

After gaining 12 cents, Brent crude futures traded at $55.77 per barrel while US West Texas Intermediate (WTI) crude futures were up by 7 cents to touch $53.43, reported Reuters.

OPEC countries and other prominent oil exporters have agreed to reduce their crude output by 1.8 million barrels a day for an initial period of six months, which started on 1 January this year.

The first month estimates revealed that the compliance rate among the OPEC countries was around 90%.

The deal can be extended if all major members of the oil cartel show effective cooperation, an OPEC source told the news agency.

"Despite the headlines, the massive inventory glut in both oil and gasoline continues to thwart any upward momentum."

Oil market still remains bloated due to rising production in the US.

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By GlobalData

OANDA Singapore senior trader Stephen Innes was quoted by Reuters as saying: “Despite the headlines, the massive inventory glut in both oil and gasoline continues to thwart any upward momentum.”

Thomson Reuters Eikon data indicated that in Asia, the oil supply remained unaffected despite production-cuts.

In India and China, fuel demand declined last month while in Europe, OPEC has significantly reduced their supply.

Rising oil exports from North Sea to Asian markets suggests that there was sufficient fuel in the European continent.

Analysts expect that in the long-run, the oil market will start tightening.