Crude oil gains some ground but supply glut worries persist
U.S. oil prices moved higher on Tuesday, but gains were expected to remain limited amid ongoing concerns over rising U.S. crude production and the risk of seeing major oil producers put an end to their output reduction plan.
U.S. crude futures for June delivery were up 0.47% at $49.07 a barrel.
On the ICE Futures Exchange in London, the July Brent contract advanced 0.78% to $51.94 a barrel.
Crude prices initially weakened after Libya’s National Oil Company said on Tuesday that production has risen above 760,000 bpd to its highest since December 2014, with plans to keep boosting production.
Crude has been under pressure in recent weeks amid fears that an ongoing rebound in U.S. shale production is derailing efforts by other major producers to re-balance global oil supply and demand.
U.S. drillers last week added rigs for the 15th week in a row, data from energy services company Baker Hughes showed on Friday, implying that further gains in domestic production are ahead.
The Organization of the Petroleum Exporting Countries and other producers including Russia originally pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year.
Traders are now hoping OPEC will extend those cuts until the end of 2017 in order to counter rising supplies elsewhere. The Organization is set to meet in May 25 in order to discuss a potentual extension.