Oil prices rose slightly Thursday, with gains tempered by a rising dollar after crude witnessed some of its biggest gains in almost two months during the US session. But OPEC is finding it hard to tighten the oil market because inventories in many parts of the world are at or near record highs.
The West Texas Intermediate for May Delivery added 0.64 USA dollar to settle at 48.37 dollars a barrel on the New York Mercantile Exchange, while Brent crude for May delivery increased 0.58 dollars to close at 51.33 dollars a barrel on the London ICE Futures Exchange.
"There is a significant chance that a short-to-medium-term bottom has been found", said Tamas Varga, analyst at London brokerage PVM Oil Associates.
Crude prices rose to the highest levels of the session following reports saying that Kuwait and other OPEC countries support extending production cuts beyond June to balance the market.
Gasoline stocks USOILG=ECI fell 3.7 million barrels, compared with expectations for a 1.9-million barrel drop.
With the average daily volume of crude imports more than 12 times the average daily volume of crude exports, many tankers were available for back-haul voyages at rates significantly below regular tanker rates, likely further reducing the cost of reaching export markets.
Russian Federation has agreed to cut its oil output by 300,000 barrels per day under the OPEC deal signed in Vienna. Brent crude, the global oil benchmark, rose $1.09, or 2.1%, to $52.42 a barrel.
"Traders are responding to speculation about the possible extension of the output cuts", Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.
The latest Reuters survey also indicated that OPEC output had declined for the third successive month in March with overall compliance at 95%.
"UAE production cut for March and April will be more than 139,000 bpd due to the maintenance activities, which means more than 100 per cent compliance", Al Mazroui said.
As OPEC and especially Saudi Arabia cut their production, other producers not participating in the cuts have been quick to fill the supply gap and gain market share.
The oil inventory level rose even though the USA exported more than 1 million barrels of crude last week.
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