Oil prices recover due to hopes of OPEC deal extension

An offshore oil platform is seen at the Bouri Oil Field off the coast of Libya

An offshore oil platform is seen at the Bouri Oil Field off the coast of Libya

Oil prices regained some ground in Monday's trading session following previous week's big losses, driven by expectations that OPEC will extend its pledge to trim output to cover all of 2017, although a surge in US drilling capped gains.

West Texas Intermediate (WTI) of US crude oil futures CLc1 gained 0.5%, by 0401 GMT, but they are still very low of $50 mark that was pierced on Friday at $49.88 a barrel.

Brent for June settlement rose as much as 40 cents, or 0.8 percent, to $52.36 a barrel on the London-based ICE Futures Europe exchange.

Crude prices witnessed a steep fall last week on consistent high supplies, despite an ongoing effort by OPEC members and other producers to reduce production by 1.8 million barrels per day (bpd) for the first six months of 2017.

According to Reuters, in recent weeks oil prices experienced some rise on talk that OPEC could extend supply cuts.

Analysts at Accendo Markets said: "Crude oil prices have begun to recover from one-month lows overnight following on from a 14th consecutive weekly increase from the Baker Hughes Rig Count [on Friday], with the amount of U.S. rigs in operation now at two-year highs".

Prices also dropped as Saudi Arabian Oil Minister Khalid Al-Falih informed that while a number of exporters have reached an initial deal to extend the curbs past June, increasing USA output is raising fear that those cuts will be undermined.

"Since its trough on May 27, 2016, producers have added 372 oil rigs (+118 percent) in the U.S.", Goldman Sachs said in a note following the release of the data.

US crude production is at 9.25 million bpd, up nearly 10 per cent since mid-2016 and approaching that of OPEC's top exporter Saudi Arabia. Comments from Saudi Arabia and Kuwait's oil ministers last week increased speculations.

Meanwhile, with a view to halt a further decline in prices, some OPEC states and other allied producers has recommended an extension of output cuts by another six months from June.

The market was supported by a drop in Iranian oil output coinciding with a rise in USA production rates.

Iranian oil exports, especially to its core markets in Asia, had soared since the ending of most sanctions against it in January 2016.

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