On Monday, oil prices rose for a fourth straight session, with both US oil and Brent crude surging over six percent in the past four sessions, as Saudi Arabia and Russian Federation said crude supply cut deal needed to be extended into 2018.
USA energy firms have added oil rigs for a 17th week in a row, extending a 12-month drilling recovery that is expected to help boost crude production in the United States to a record high next year.
Kuwait's oil minister, Essam al-Marzouq, said on Tuesday he supported the Saudi/Russian initiative.
Oil futures were up in North American trading on Tuesday, with prices headed closer to daily highs reached in the prior session, as investors looked ahead to weekly data from the US on stockpiles of crude and refined products. Oman said it fully supported the idea of a nine-month extension.
US crude oil inventories were expected to fall by around 2.3 million barrels during the week ended May 12, according to a Reuters poll. The contract rose $1.01 to close at $48.85 on Monday, the highest since April 28. Total volume traded was about 14% above the 100-day average.
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Brent crude oil gained 30 cents to touch $52.12 a barrel, while the United States light crude traded 25 cents higher at $49.10 against their last close, reported Reuters. The global benchmark crude traded at a $2.66 premium to July WTI.
USA crude stockpiles are forecast to have declined by 2.92 MMbbl to 519.6 MMbbl in the week ended May 12, according to a Bloomberg survey of analysts.
"Low oil prices may bring satisfaction for some consuming countries in the short run, but in the long term as a result of reduced investment in new oil production, they could end up paying a much higher price for a barrel of oil", he said. Supplies of gasoline probably dropped 1 million to 240 million barrels while inventories of distillate fuel, a category that includes diesel and heating oil, slipped 1.5 million to 147.3 million barrels last week.
OPEC's effort to shrink huge global crude stockpiles may fail even if the cartel agrees to extend its agreement to pump less oil, the International Energy Agency warned on Tuesday.
"The IEA report offers a bullish explanation for today".
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