Crude-oil prices held steady in Asia on Friday, though they are poised to end the week more than 3% higher as traders expect the global oil cartel to extend a production cut deal when the group meets later in the month.
Optimism was also fuelled by the Organization of the Petroleum Exporting Countries' report that showed cartel members were sticking to the production quotas. In April, OPEC's total output dropped again to an average of 31.73 million barrels a day. This means the cartel's production has fallen by more than the 1.2 million barrels a day that it had pledged in November.
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On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at $47.87 a barrel at 0256 GMT, up $0.04 in the Globex electronic session. July Brent crude on London's ICE Futures exchange rose $0.05 to $50.82 a barrel.
However, the OPEC report also noted that the cartel expects non-OPEC oil supplies to rise by 950,000 barrels a day this year, an upgrade from last month's forecast.
But that could actually boost prices by creating pressure for OPEC to extend or even deepen its output cuts when members meet on May 25, brokers and analysts said.
"The odds of a larger and longer cut now outweigh the odds of nothing, no cut at all. That's a difference," said Scott Shelton, a broker at ICAP PLC. "The market's kind of lost its downward momentum."
Still, prices won't like rebound quickly because of accelerating production from countries like U.S., Brazil, Canada, and even OPEC members Nigeria and Libya.
OPEC will also be mindful that U.S. producers will likely expand output and take more market share away from the cartel the longer it curbs production, said Tom Pugh, a commodities economist at Capital Economics.
"As such, it is likely to extend its production cuts by the minimum amount of time necessary to bring stocks down to more normal levels," he noted.
Nymex benchmark gasoline contract for June rose 0.2% to $1.5657 a gallon, while June diesel was 0.1% higher at $1.4916. ICE gasoil for June unchanged at 449.25 a metric ton.
--Tim Puko also contributed to the story
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(END) Dow Jones Newswires
May 11, 2017 23:52 ET (03:52 GMT)