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.
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 33 cents at $51.77 a barrel by 0844 GMT. U.S. light crude <CLc1> fetched $49.41 a barrel, up 44 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 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.
“After all, the main drivers – OPEC production cut versus U.S. production gains – are unchanged.”
The dollar <.DXY> fell against a basket of currencies, giving buyers of greenback-denominated commodities reason to purchase.
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.
Saudi Arabia’s energy minister welcomed the news, saying Russia’s contribution was “good” and that overall non-OPEC compliance was 85 percent.
The Organization of the Petroleum Exporting Countries and other producers including Russia originally pledged to cut output by almost 1.8 million bpd in the first half of the year.
OPEC has come under pressure to extend the cuts to cover all of 2017 to counter bulging supplies elsewhere.
“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.
The supply overhang is in part due to surging U.S. production <C-OUT-T-EIA>, which has risen 10 percent since mid-2016 to 9.27 million bpd.
Source: Reuters (By Karolin Schaps; Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson)