Oil prices have increased amid expectations that the Organization of the Petroleum Exporting Countries (OPEC) with other major exporters would extend production cuts for the remaining six months of the year and possibly into 2018.
Benchmark Brent crude oil LCOc1 gained 25 cents to touch $54.40 a barrel, while the US light crude oil CLc1 jumped 20 cents to $51.67, reported Reuters.
Both crude benchmarks have gained more than 10% from their earlier lows below $50 a barrel on expectations that OPEC and other key producers would continue with global crude cuts as Saudi Arabia and Russia have already announced their support.
OPEC along with other producers agreed to reduce supplies by 1.8 million barrels per day (bpd) for the first six months of this year to end the global oversupply.
The oil cartel is scheduled to meet on 25 May to decide on extending the deal.
Wood Mackenzie research director Sushant Gupta was quoted by the news agency as saying: “If the cuts are rolled over until Q1 2018, we expect oil prices to be around $57 a barrel for 2018.”
Despite OPEC efforts, the oil market did not tighten enough due to a consistent rise in US output, which has increased to 9.3 million bpd, an 10% increase over the mid-2016 level.