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December Brent crude futures were last up 42 cents at
$50.61 a barrel by 0913 GMT, off a session low of $49.74, while
U.S. crude futures rose 37 cents to $48.61 a barrel, above the
day's low at $47.78.
The Organization of the Petroleum Exporting Countries said last
week it would cut output to between 32.5 million barrels per day
(bpd) and 33.0 million bpd from about 33.5 million bpd, with
details to be finalised at its policy meeting in November.
Initial scepticism last week over the effectiveness of the deal
in eroding the global surplus gave way to a wave of
short-covering that drove the price above $50 a barrel for the
first time since late August on Monday.
"The lukewarm response to the OPEC deal from analysts
(rightfully so) probably attracted some premature selling, with
technical traders currently in the driving seat. Oil always runs
ahead of itself and this time round is no exception," Saxo Bank
manager Ole Hansen said, referring to the price rally.
OPEC's oil output is likely to reach 33.60 million bpd in
September from a revised 33.53 million bpd in August, its
highest in recent history, a Reuters survey found on Friday.
"Sentiment has been slightly dented by a Reuters survey Friday,
showing that despite agreeing to cut production OPEC pumped
crude in record amounts through September," said Jeffrey Halley,
senior market analyst at brokerage OANDA in Singapore.
Data last week from the U.S. Commodity Futures Trading
Commission showed money managers raised their net long holdings
of U.S. crude futures in the week to Sept. 27. [CFTC/]
Analysts said there was downside risk to oil prices if the
planned cut wasn't deep enough to bring production back in line
with consumption.
"OPEC has created its own Q4 risk to oil prices ... In raising
expectations of a November deal to cut production, it also risks
a steep price decline should it fail to achieve its goal of
cutting output back to less than 33 million bpd," Barclays said
in a note to clients.
Despite that, the bank said it did not expect a repeat of the
price crash seen late last year after a rally earlier in 2015,
citing an improving Asian economic growth outlook, falling oil
supplies and rising investor interest in oil markets as support
factors.
(Editing by Susan Thomas)
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