Oil prices extended gains on Tuesday after top producers Saudi Arabia, Russia and Kuwait supported prolonging supply cuts until the end of March 2018 in an effort to drain a global glut.
Extending the curbs at already agreed-upon volumes is needed to reach the goal of reducing global inventories to the five-year average, the energy ministers of the world's biggest oil producers said in a joint press conference in Beijing.
WTI Crude is now trading up 3.03 percent at $49.29 per barrel, with Brent Crude up 2.93 percent at $52.33 (1126GMT).
The statement comes ahead of Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna on May 25 when leaders of the member nations would consider extending output cuts agreed with 11 non-members including Russian Federation in December a year ago, Reuters added. The decision for extending the oil production cut was mutually agreed upon by the two major oil producing countries and all the active members of the OPEC.
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Both contracts slid during the session to the lowest since November 30, the day OPEC agreed to cut supply. This fluctuation had resulted in the rise of 2.5 percent in the stock price of the crude oil in the commodity market.
Russian Federation and Saudi Arabia on Monday called for extending the deal struck late past year, ahead of an OPEC meeting on May 25.
OPEC began production cuts on January 1 in a bid to reduce swollen global inventories and bolster the price of oil, which is still stuck at half its 2014 level.
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In the first quarter, the IEA said, "we might not have seen a resounding return to deficits but this report confirms our recent message that the re-balancing is essentially here and, in the short term at least, is accelerating".
The agreement needs to be extended as we will not reach the desired inventory level by end of June.
Immediately after the briefing, oil prices began an upward swing to a three week high, gaining almost $2 on the barrel.
Initially, it had been planned that the deal to cut nearly 1.8 million barrels per day in production and agreed on December 10, will be effective in the first half of this year with possibility of rollover toll the end of 2017.
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