Investing.com - Crude prices held strong gains in Asia on Monday, shrugging off the latest missile test by North Korea and waiting for the big meeting on May 25 widely expected to extend an oil output cut pact through March 2018.
The U.S. West Texas Intermediate crude June contract rose 0.99% to $51.17 a barrel. Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery were last quoted at $53.88 a barrel.
"It's a big week for oil with the OPEC meeting in Vienna taking place on Thursday and the market having already digested news that both Russia and the Saudi's have advocated a nine-month extension ... (T)he key question here this week is with price rallying into the meeting, will the outcome live up to expectations or will traders sell the fact?" IG Chief Market Strategist Chris Weston wrote in a Monday note.
Last week, oil futures settled at a four-week high on Friday, with prices scoring a weekly gain of more than 5% amid optimism that key producers will extend output cuts beyond an agreed-on June deadline when they meet later this month.
Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on May 25 to decide whether to extend their current production agreement beyond a June 30-deadline. In November last year, OPEC and 11 other non-OPEC producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30.
Most market analysts expect the oil cartel to extend output cuts for a further nine months until March 2018, instead of six months as previously expected.
There is also talk that OPEC is looking at the option of deepening current production cuts, but it is not clear whether there would be support for that.
So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya, and a relentless increase in U.S. shale oil output.
Data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 18th week in a row, the second-longest such streak on record, implying that further gains in domestic production are ahead.
The U.S. rig count rose by 8 to 720, extending an 11-month drilling recovery to the highest level since April 2015. Elsewhere on Nymex, gasoline futures for June gained 4.6 cents, or about 2.9% to end at a four-week high of $1.652 on Friday. It closed up around 4.8% for the week amid easing concern over lackluster demand.
June heating oil added 3.7 cents to finish at $1.582 a gallon. For the week, the fuel tacked on roughly 6%. Natural gas futures for June delivery rose 7.4 cents to settle at $3.256 per million British thermal units, up 2.3% for the session but about 4.9% lower for the week.