Oil prices climbed tuesday on news of lower production by Russia and Organization of Oil Exporting Countries, OPEC, and expectations that major exporters would extend output cuts into the second half of the year.
Benchmark Brent crude oil was up 30 cents at $51.82 a barrel by. The futures contract hit a one-month low of $50.45 last week after the restart of two Libyan oilfields while U.S. light crude was 20 cents higher at $49.04.
The OPEC and other producers including Russia have agreed to cut output by 1.8 million barrels per day (bpd) for the first half of 2017 to try to reduce a global glut.
OPEC oil output fell for a fourth straight month in April, a Reuters survey showed, dropping to 31.97 million barrels per day, (BPD) as Nigeria and Libya pumped less crude.
Russian oil production fell slightly last month to 11.00 million bpd, almost hitting its output target under the deal with OPEC, Energy Ministry data showed.
OPEC and other producers plan to meet on May 25 and are widely expected to keep output limits for the rest of the year.
“The second half of the year looks brighter, provided OPEC remains at least as disciplined as during the first half of 2017,” said Tamas Varga, analyst at London broker PVM.
BP Chief Financial Officer Brian Gilvary told Reuters yesterday that oil inventories would keep falling this year.
“If the OPEC cuts get rolled into the second half of the year, that will underpin oil prices,” Gilvary said. “We are managing things around $50-$55 a barrel. That’s probably the range we would expect for the rest of the year.”
Libya’s National Oil Company said on Monday production had risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.
U.S. crude output is at its highest since August 2015, while the Syncrude Canada oil sands project has started shipping crude from its Mildred Lake upgrader again after cutting production due to a fire in March.
U.S. crude inventories are expected to mark a fourth straight week of declines from a record high hit at the end of March, but stocks are still seen about 10 percent above year-end levels, according to Reuters calculations.