Oil prices rebounded regaining some of its earlier losses following reports that the ongoing supply cut deal may be extended beyond June.
Brent crude futures jumped 21 cents to $72.25 per barrel, while US West Texas Intermediate (WTI) crude futures gained 17 cents to trade at $63.67 a barrel, Reuters reported.
Earlier, Saudi Arabian energy minister Khalid Al-Falih said that the Organization of the Petroleum Exporting Countries (OPEC)-led supply cut deal may be extended till the end of 2019.
The statement came at a time when Saudi Arabia is subject to increasing pressure from the US to raise output following its sanctions against Iran.
Oil prices dropped in earlier trading on reports of struggling factory activity in China.
However, in 2019 the market rallied almost 40% driving on the supply cuts and US sanctions of key petroleum producers Iran and Venezuela.
Bank of America Merrill Lynch was quoted by Reuters as saying: “Iranian oil production will fall to 1.9 million barrels per day in 2H19 from 3.6 million barrels per day in 3Q18 as U.S. sanctions kick in and waivers eventually expire.”
However, it added that the oil market will remain balanced 2019 as production from OPEC and the US is expected to rise.
On the other hand, French bank BNP Paribas stated that it expects the crude markets to rise until the third quarter of 2019. Subsequently, oil prices may drag due to sharp rise in US exports.