Oil rebounds from
one-month low on hopes for output cut extension
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[April 28, 2017]
By Karolin Schaps
(Reuters) - Oil prices rebounded on Friday after dropping to a one-month
low the previous day, prompting investors to buy at cheaper levels ahead
of a May OPEC meeting at which producers could extend output cuts.
Optimism is rising about the prospect of a year-long production curb
deal, with most analysts polled by Reuters expecting the accord between
the Organization of the Petroleum Exporting Countries and non-OPEC
producers, struck at the end of last year, to be extended to the end of
"OPEC ... effectively said the production cut will be extended, meeting
the reality of the restart of a big Libyan oilfield and the continued
expansion of U.S. shale oil," said Greg McKenna, chief market strategist
at brokerage AxiTrader.
Friday's oil price gains were also helped by a weaker dollar and signs
that non-OPEC member Russia was fully compliant with output limits
agreed among major producers late last year.
Benchmark Brent crude <LCOc1> futures were trading up 44 cents at $51.88
a barrel by 1150 GMT. U.S. light crude <CLc1> fetched $49.55 a barrel,
up 58 cents.
Despite Friday's gains, both contracts were set for their second
straight weekly and monthly losses after Thursday's price drop driven by
news of the oilfield restarts in Libya.
"The markets see such a price drop as a nice buying opportunity within
the relatively small trading ranges we see," said Hans van Cleef, senior
energy economist at ABN AMRO Bank in Amsterdam.
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all, the main drivers - OPEC production cut versus U.S. production gains - are
A Reuters poll published on Friday showed analysts expect oil supply and demand
could fall into balance by the end of this year if producers agree to extend the
Nevertheless, most cut their average yearly price forecasts for Brent and WTI
The Reuters survey of 35 economists and analysts forecast that Brent crude would
average $57.04 a barrel in 2017, compared with last month's forecast of $57.25
and an average so far this year of about $55.
With producers' compliance with the output deal still a major price driver,
comments from Russia that it had cut by 300,000 barrels per day (bpd) also
supported trading on Friday.
Saudi Arabia's energy minister welcomed the news, saying Russia's contribution
was "good" and that overall non-OPEC compliance was 85 percent.
(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson
and David Evans)
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