Oil prices rose on Monday as Saudi Arabia’s energy minister said an OPEC-led production cut scheduled to end in June would likely be extended to cover all of the year, or even into 2018, although another increase in U.S. drilling capped gains.
Brent crude futures were at $49.48 per barrel at 0652 GMT (2.52 a.m. ET), up 38 cents, or 0.75 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $46.52 per barrel, up 30 cents, or 0.7 percent.
Saudi Arabia’s energy minister Khalid Al-Falih said on Monday oil markets were rebalancing after years of oversupply, but that he still expected the OPEC-led deal to cut output during the first half of the year to be extended.
“Based on the consultations I have had with participating members, I am rather confident the agreement will be extended into the second half of the year and possibly beyond,” said Falih, Saudi Minister of Energy, Industry and Mineral Resources, during an industry event in Malaysia’s capital Kuala Lumpur on Monday.
The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, as well as other producers including Russia, pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year to prop up the market.
The comments from Falih and rising prices came after steep falls last week due to ample supply in countries that aren’t participating in the cuts, including the United States where output is soaring.
A decision on whether to continue the production cuts is expected at OPEC’s next official meeting on May 25.
“Oil may have seen the worst of the selloff for now, as the market turns its attention to the OPEC meeting at the end of the month,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
Some traders said the victory of Emmanuel Macron in the French presidential election against far-right Marine Le Pen also supported oil prices as it raised hopes of a more stable European economy.
Still, both Brent and WTI crude are holding below $50 amid ample supplies.
U.S. drilling continued to pick up last week, with the rig count climbing by 6 to 703.
Since a low point in May 2016, U.S. producers have added 387 oil rigs, or about 123 percent, Goldman Sachs said.
On the demand side, China’s crude oil imports in April eased by almost 9 percent from March to 8.37 million bpd, although this was largely due to refinery maintenance.
China’s April crude imports were up 5.5 percent versus a year ago.