Oil hits 3-week highs as OPEC deal extension seen likely

Analysts polled by Reuters predicted that data will show US crude oil stocks rose 1.4 million barrels in the latest week.

Together, OPEC and the 11 non-OPEC producers that signed up for the cut were supposed to take off 1.8 million barrels from the global daily average supply.

USA crude West Texas Intermediate (WTI) futures ended up US$1.14 cents, or 2.4 per cent, at US$49.51 a barrel after peaking on the data at US$49.54, also the highest since March 16. The market is positioning for a possible reversal in the incessant swell in U.S. crude stocks seen since the start of this year, as United States refineries ratchet up in the second quarter from their multi-year low operating rates.

In our view, the combination of OPEC cuts, seasonal increases in refining utilization and field maintenance should result in crude inventory draws in the U.S.as soon as late April - about three weeks ahead of normal.

Disruptions to crude production in Libya added further support to oil prices.

Oil prices settled at a roughly one-week high Tuesday, buoyed by disruptions to Libyan crude production and talk of a six-month extension to an OPEC-led pact to limit global output.

Growing expectations that the Organization of the Petroleum Exporting Countries will agree to extend its production-cut agreement also contributed to oil's price climb.

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US crude oil was 10 cents lower at.41.

Russian Federation has reduced the oil production by 200,000 barrels per day (bpd) as compared to the average daily volume recorded in October 2016, said the country's energy minister Alexander Novak. WTI Futures was up by 5 cents at $49.57 per barrel.

Libya said production dropped by about a third or 250,000 bpd earlier this week due to armed protesters blocking western oilfields of Sharara and Wafa.

A survey conducted by this news agency showed that combined output by the OPEC countries reduced for three consecutive months in March and the members have now complied with almost 95% of their commitments under the output-cut deal.

However seems lower by non-OPEC members like Russian Federation, who have officially agreed to participate in cutting.

As markets remain bloated halfway into the curbs, there is a broad expectation that the supply cuts will be extended into the second half of the year.

As OPEC and especially Saudi Arabia cut their production, other producers not participating in the cuts have been quick to fill the supply gap and gain market share.

  • Megan Austin