Oil prices have increased above $50 a barrel following a fall in US crude stocks and tightening of Saudi Aramco’s supplies to the Asian market.
Brent LCOc1 soared by 30 cents and traded at $50.52 a barrel, while the US light crude oil CLc1 gained 35 cents to touch $47.68 per barrel, reported Reuters.
The Organization of the Petroleum Exporting Countries (OPEC) member countries are scheduled to meet on 25 May to decide on the extension of production cuts during the second half of this year.
OPEC and other producers such as Russia have agreed to reduce oil output by 1.8 million barrels a day to end the global glut.
But the initiative was partially successful due to rise in US production.
The news agency quoted BMI Research as saying: “OPEC and non-OPEC members have shown commitment to production cuts and an extension of the agreement… will assist in drawing stocks over Q3 and stabilising the market.”
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Next month, Saudi Aramco will curb its supplies by seven million barrels to multiple Asian refiners.
The US also witnessed a steep decline in crude stockpiles and also a fall in refined products inventory. The US Energy Information Administration reported that crude inventories decreased by 5.2 million barrels in the week ending 5 May to reach 522.5 million barrels.
Although the inventories fell, oil production in the US continued to rise to 9.3 million bpd last week, a 10% increase from its mid-2016 level.