Oil prices rose on Wednesday after Iraq and Algeria joined Saudi Arabia in supporting an extension to OPEC supply cuts and U.S. crude inventories fell more than expected.
But the rise failed to recoup last week’s losses with concerns about rising output from the United States, Libya and Nigeria continuing to weigh.
The industry group the American Petroleum Institute reported a fall in U.S. crude inventories by 5.8 million barrels last week, which was more than the 1.8 million-barrel slide analysts predicted.
Investors are now waiting to see if those numbers are confirmed on Wednesday by official figures on weekly U.S. crude and oil product inventories from the U.S. government’s Department of Energy, due out at 1430 GMT.
Global benchmark Brent crude was up 68 cents at $49.41 a barrel by 1327 GMT. U.S. light crude oil was 69 cents higher at $46.57 a barrel.
“Oil prices are still finding it difficult to recoup the losses they suffered last week,” analysts at Commerzbank said in a note, adding the impact on prices from the fall in U.S. inventories had been underwhelming.
Also supporting prices were comments from Algeria’s energy minister on Wednesday that Algeria and Iraq favour extending global supply cuts when OPEC meets later this month.
On Monday, Saudi Arabia’s oil minister Khalid al-Falih said he expected the output deal to be extended to the end of the year or possibly longer.
State-owned Saudi Aramco will also reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of the Organization of the Petroleum Exporting Countries’ deal to reduce production.
Aramco had previously maintained supplies to important Asian customers.
But questions remain about the effectiveness of OPEC-led cuts, with OPEC member Libya saying production now exceeded 800,000 barrels per day (bpd) for the first time since 2014 and could rise to 1.2 million bpd later this year.
Nigeria, which along with Libya is exempt from OPEC cuts, is also expected to see a jump in output soon as Shell tests the Trans Forcados oil export pipeline before it restarts.
Brent and U.S. light crude futures contracts closed on Tuesday at their second lowest levels since Nov. 29, the day before OPEC announced it would cut output in the first half of 2017.
Prices surged after that deal, but have come under pressure in recent weeks as U.S. production has climbed, undermining OPEC-led efforts to balance supply with demand.
