Oil prices edged up on Friday on optimism among investors that OPEC would agreed to extend production cuts aimed at ending a global glut into the second half of the year.
U.S. light crude CLc1 rose 18 cents to $49.15 a barrel at 4:03 p.m. EDT (1903 GMT), off the day’s high of $49.76. Benchmark Brent crude LCOc1 futures settled up 27 cents to $51.71 a barrel. Both benchmarks were headed for weekly and monthly losses.
If the Organization of the Petroleum Exporting Countries (OPEC) agrees to extend the cuts, then bloated global inventories could drain by the end of the year, a Reuters poll of economists and analysts showed.
OPEC next meets in May to discuss oil supply policy and it secretary-general, Mohammad Barkindo, said this week the group wants to see global inventories reduced further.
That has contributed to investor confidence that the producer group will extend supply cuts into the second half of the year. OPEC’s deal to curb supply, which non-OPEC members such as Russia have joined, is due to expire at the end of June.
The talk of extending the cuts has come even before some producers have been able to reduce output to the levels agreed upon.
Non-OPEC member Russia said it would meet its target under the deal of cutting output by 300,000 barrels per day (bpd) by the end of April, which supported crude prices.
OPEC’s top producer, Saudi Arabia, said on Friday that Russia’s contribution in April to the global output curbs was good.
Saudi Energy Minister Khalid al-Falih also said he expected global oil demand to pick up in the second half of the year.
U.S. oil prices have risen since OPEC made the deal in November, but they are still below where producers would like them. Lower prices would encourage OPEC to extend the deal, said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
Still, slow growth in the United States, the world’s largest economy and top oil consumer, capped oil’s gains on Friday, Haworth said.
Gross domestic product increased at a 0.7 percent annual rate, the Commerce Department said on Friday. That was the weakest performance since the first quarter of 2014.
Also on the bearish side for markets, weekly U.S. government data showed crude output, mostly from the shale oil industry, rising. Crude output for February rose 193,000 barrels per day to 9.03 million bpd, the highest since August 2015.
The number of rigs in the field also rose for the 15th straight week. The U.S. rig count increased by nine to 697 total rigs on the week, according to Baker Hughes data.
High inventories and rising supply indicated “a need to be cautious,” Exxon Mobil’s (XOM.N) head of investor relations, Jeff Woodbury, said in a conference call with analysts after the firm reported first quarter results. Exxon quarterly profit more than doubled to $4.01 billion.
U.S. oil prices have lost ground in eight of the last 11 sessions. Hedge funds slashed bullish bets on U.S. crude oil for the first time in four weeks in the week to April 25, data from the U.S. Commodity Futures Trading Commission (CFTC)showed on Friday. U.S. oil futures CLc1 on the New York Mercantile Exchange dipped by about 5.4 percent and averaged $50.25 per barrel during the trading days ended April 25.
Crude tested its 200-day moving average on Thursday but that floor for prices appeared to be holding, Ole Hansen, head of commodity strategy at Saxo Bank, said in a report.