Industry analysts say OPEC, which is dominated by Saudi Arabia, and non-OPEC producers led by Russian Federation have been attempting to use the production cuts to drive up prices but their efforts could be undermined as the U.S.is not included.
Russia's largest oil producer Rosneft said on Thursday it was ready to stick to crude output agreements with Opec.
The West Texas Intermediate for June delivery rose 0.28 us dollars to settle at 49.35 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery added 0.30 dollar to close at 52.51 dollars a barrel on the London ICE Futures Exchange. "While most remain optimistic over Opec extending the production deal at the upcoming meeting on 25 May, it becomes a question of how USA shale reacts and if (American) pumping intensifies". US crude oil lost $1.02 to reach a low of $48.05 was last trading 55 cents a barrel lower at $48.52.
Concurrently, the West Texas Intermediate (WTI) was seen inching closer to $50, coming in at $49.45 per barrel, up 38 cents or 0.77%.
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Both crude oil benchmarks rose on Wednesday after news of a drawdown in US crude inventories and a dip in USA output. But in terms of whether this will be sustained-that would depend on "adherence to the supply cuts" and global demand expectations, as well as factors outside of OPEC's control, including US production, he said.
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.
In a note, Bank of America Merrill Lynch said the time it takes production cuts to impact on stocks was one of the major challenges for OPEC. Accounting for that means OPEC would need to revisit and whittle down, if necessary, the participating countries' quotas through the duration of the extension.
But the US crude drawdown was smaller than expected and the oil market remained extremely well supplied, analysts said.
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OPEC agreed to slash the output by 1.2 million barrels per day from January 1.
The two ministers said they had chose to recommend to their OPEC and non-OPEC peers that the 1.8 million barrels per day of combined production cuts in force since January this year be rolled over to March 2018.
This message was hammered home by Gene McGillian, VP of market research at Tradition Energy, who told Reuters that with increased production in Libya and Nigeria, as well as the U.S, sticking to current cuts might not be enough: "When you balance that cut with the increase in other areas it's probably a net-net cut of half a million a day, ".
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