The Organization of the Petroleum Exporting Countries and other producers including Russian Federation have agreed to cut output by nearly 1.8 million barrels per day (bpd) during the first half of the year to try to reduce a global fuel glut.
Crude oil prices gained on Thursday as investors were buoyed by falling inventories in the United States and higher-than-expected supply cuts to Asia by Saudi Arabia.
Saudi Arabia's Energy Minister Khalid Al-Falih said he was "confident the agreement will be extended into the second half of the year and possibly beyond", in comments at a conference in Kuala Lumpur.
While US oil inventories fell, the country's crude oil production continued to rise, jumping above 9.3-million barrels a day last week, in what is now a more than 10% increase since its mid-2016 trough.
An agreement led by the Organization of Petroleum Exporting Countries to calm the market with managed production declines has created economic conditions supportive of USA shale oil production gains, which is capping any major rally in crude oil prices.
The Organization of the Petroleum Exporting Countries (OPEC) members made a decision to reduce output by 1.8 million barrels per day to rebalance the oil market for the first six months of this year.
"As a result, USA crude oil production surpassed 9 mb/d in February 2017, about 0.5 mb/d higher than the low seen in September 2016".More news: Dead in Cargo Plane Crash at Yeager Airport
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As a result, global benchmark Brent crude was up $1.24, or 2.5% at $49.97 USA a barrel mid-morning Wednesday.
OPEC countries including core Gulf members are discussing internally whether an extension of nine months or longer is needed to give the market more time to rebalance, the sources said. Aramco had previously maintained supplies to important Asian customers.
In the research note entitled Oil Nearing Capitulation, Goldman Sachs said there was "growing evidence of the ability of USA shale to respond near $50 per barrel and the availability of capital to support such activity", according to MarketWatch.
Asia will also account for almost two-thirds of global gas demand, by that time he said.
The rebound in oil prices to around $50 in recent months breathed new life into US producers, who have boosted drilling in shale regions, lifting USA output to levels not seen since mid-2015.
Still, the notification of cuts in June allocations signals added urgency among Opec members as evidence mounts that the output reduction has so far failed to rein in a global crude glut in crude.