Investing.com – Crude futures soared on Monday, after energy ministers from Saudi Arabia and Russia said they would support an extension of the supply-cut agreement into March 2018.
On the New York Mercantile Exchange crude futures for June delivery gained 2.11% to settle at $48.85 a barrel, while on London's Intercontinental Exchange, Brent added 2.44% to trade at $51.84 a barrel.
Investors’ concerns regarding a possible deal extension were eased on Monday, as top exporter Saudi Arabia and Russia supported the idea of extending the current supply-cut agreement for a period of nine months, until March 2018.
"There has been a marked reduction to the inventories, but we're not where we want to be in reaching the five-year average," Saudi Energy Minister Khalid al-Falih said on Monday.
In November last year, OPEC and other producers, including Russia, agreed to cut output by about 1.8 million barrels per day (bpd). The deal to cut production expires in June this year but includes a possible six-month extension.
OPEC is expected to decide at talks on May 25 whether to extend the current deal to cut production.
Crude futures dropped to November 2016 lows in late April, on the back of concerns that rising levels of U.S. oil output would dampen OPEC’s efforts to rein in the glut in supply.
Although, fears of a glut in U.S. oil production, have eased over the past several weeks, after U.S. crude inventories fell for a fifth-straight week, for the week ended May 3, overall sentiment concerning the level of long-term U.S. oil production remained bearish.
The Energy Information Administration, last week, raised its U.S. oil production forecast and lowered its projection for average oil prices for 2017.