LONDON: Oil prices extended gains on Tuesday after top producers Saudi Arabia, Russia and Kuwait supported prolonging supply cuts until the end of March 2018 in an effort to drain a global glut.
Brent crude oil was up 30 cents at $52.12 a barrel by 1335 GMT. US light crude was also 30 cents higher at $49.15 a barrel. Both benchmarks have risen more than $5 since hitting five-month lows 10 days ago.
Saudi Arabia and Russia said on Monday they agreed on the need for a 1.8 million barrels per day (bpd) crude supply cut to be extended by nine months, until the end of March next year.
Kuwait's oil minister, Essam al-Marzouq, on Tuesday backed the Saudi/Russian initiative. Other OPEC states are expected to support the move at a meeting on May 25.
"Rebalancing is essentially here and, in the short term at least, is accelerating," the International Energy Agency said in its monthly report on Tuesday.
Russian Energy Minister Alexander Novak said on Tuesday the main aim of the proposed extension of oil output cuts was to bring the world's commercial oil inventories down to the five-year average and to stabilise the market.
"Our goal is to balance the market and to remove the surplus (from stocks)," Novak told reporters in St Petersburg.
US bank Goldman Sachs said the deal would likely extend the oil price rebound "although the rally so far ... has remained modest compared to the move that occurred last year when the OPEC cuts were first announced".
James Woods, investment analyst at Rivkin Securities, said world oil supplies would likely remain plentiful, even if OPEC extended the production cut as expected.
"As we have seen over the past six months, rising US production and record inventories have kept upside limited and a nine-month extension at this stage is unlikely to break that."
Goldman Sachs said output would increase from OPEC members that were exempt from the cuts. Libya and Nigeria, which have faced disruptions to production, were excluded from limits on their output.
In addition, US oil production is rising quickly and now up more than 10 percent since mid-2016 at 9.3 million bpd.
"These combined volumes could largely offset the benefit of the extended cuts," Goldman Sachs said, keeping its average Brent price forecast for the third quarter of 2017 at $57 per barrel.
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