Crude futures kicked off the week higher following sharp declines last week, buoyed by expectations that major producers will cut more of their supplies in a bid to whittle down the still-high global inventories.
The election of Emmanuel Macron, a pro-free trade centrist, as France's next president also helped to assuage concerns that the European economy may see further headwinds.
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On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at $46.85 a barrel at 0121 GMT, up $0.63 in the Globex electronic session. July Brent crude on London's ICE Futures exchange rose $0.72 to $49.82 a barrel.
Oil plunged by more than 6% last week, dropping to their lowest level since November. The selling pressure was ignited by fears that members of the Organization of the Petroleum Exporting Countries won't enlarge the size of their agreed production cuts when they meet on May 25, while non-cartel producers like Russia aren't fully on board with continuing the curtailment.
Since then, some investors have returned to the market after Saudi Arabia reassured that the production cuts will be extended with Russia's participation. Still, some traders remain wary that prolonging the curtailments will result in a swift and material reduction in global inventories.
"The fundamentals haven't improved because the world is still awash with oil," said a Singapore-based crude trader, noting the upsurge in U.S. shale production and exports, especially to Asia, is making it tougher for OPEC to compete.
According to JBC Energy, at least 40% of the U.S.' 1.2 million barrels a day crude exports in February flowed to Asia. The recent narrowing spread between the Brent and Dubai benchmarks "could result in an uptick in U.S. exports heading to Asia in May," said the consultancy.
Energy investors will be watching for China's April crude import data due later Monday. Last month, China's crude imports hit a record high in a likely one-off event. Most China market observers say the country will remain thirsty for foreign crude but import growth will moderate this year, given the slowing economy and a raft of new rules that crimp the import ability of local refiners.
Another closely-watched data point is the monthly U.S. Energy Information Administration short-term outlook due Tuesday, said Vivek Dhar, a commodities strategist at the Commonwealth Bank of Australia.
"The market is anticipating the EIA to raise its U.S. oil production projections again and if confirmed, it would be very bearish to sentiment," he said.
Last month, the U.S. government raised their crude output estimates for this year to 9.2 million barrels a day and to 9.9 million barrels a day in 2018. Output levels have stood above 9-million barrels a day for the past 11 weeks as shale producers activate more oil rigs.
Nymex reformulated gasoline blendstock for June rose 0.8% to $1.5167 a gallon, while June diesel was up 1.1% at $1.4521. ICE gasoil for rose 0.5% higher at $435.75 a metric ton.
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(END) Dow Jones Newswires
May 07, 2017 22:33 ET (02:33 GMT)