Oil prices up 2% after deal to extend supply cut

Overall sentiment held firm and June WTI futures traded around $49.15 p/b at the United States open with July Brent trading at $52.10.

"Looking at the second quarter of 2017, if we assume that April's OPEC crude oil production level of 31.8 million barrels per day is maintained, and nothing changes elsewhere in the balance, there is an implied stock draw of 0.7 million barrels per day", said the report.

In November previous year, OPEC and other major global producers, including Russian Federation, agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.

Surging U.S. output has raised concern that the cuts are failing to reduce a glut.

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And on Tuesday, Kuwait said it "gives its full backing and support to. extend the oil output cuts deal between OPEC and other producers until March 2018".

"With crude sliding well below the $50 a barrel mark, producers clearly had to cushion the downfall and today's OPEC announcement may serve as nothing more than a dead-cat bounce, if global demand does not pick up", he said.

USA bank Goldman Sachs said the deal "will likely further extend the oil price rebound... although the rally so far... has remained modest compared to the move that occurred a year ago when the OPEC cuts were first announced".

The first source familiar with Iranian thinking said it was necessary to support prices to ensure there is enough investment in supplies to avoid shortages in future, echoing a view often expressed by Saudi Arabia.

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Futures climbed for a fifth day in NY, extending a 2.1 per cent jump Monday after the Saudi and Russian energy ministers said they favour extending curbs until the end of March. The OPEC members won exemptions as they attempt to restore oil supply sidelined by internal conflicts, but production has risen in both nations and "any significant increase clearly offsets cutbacks by other OPEC and non-OPEC countries", according to IEA.

The U.S. dollar slipped on Monday, losing ground against so-called commodity currencies as oil prices leapt on the prospects for an OPEC-led deal for continued production limits.

"As producers in the U.S. are expected to increase output, prices will continue to be restricted from rising".

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