While output curbs that started January 1 are working, global inventories aren't yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said in Beijing alongside his Russian counterpart, Alexander Novak.
The dollar index remained on the defensive in early Europe with a test of 6-month lows just below 98.50 for the trade-weighted index and a weaker dollar provided net support for oil prices as EUR/USD traded to 6-month highs above 1.1050.
U.S. West Texas Intermediate (WTI) crude futures were at $49.10, up 25 cents, or 0.51 percent from their last settlement. That would be longer than the optional six-month extension first agreed.
Supply and demand in the oil market are close to matching up, the IEA said today, but rising USA supply could mitigate landmark OPEC-led production cuts.
Non-OPEC member Kazakhstan said on Monday it would struggle to join any new deal on the old terms, as its own output was set to jump.
But, this would depend on how much low-priced United States shale producers would raise production.
The volume of global oil production amounted to 96.17 mln barrels per day, which is 90,000 barrels per day less than a year ago. "We've come to conclusion that the agreement needs to be extended".
Vladimir Putin, Russia's president, said later yesterday: "It's right that the decision was made not for two, three, four months but for nine months".
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"With the USA rig count increasing for its 17th consecutive week, I think we can safely say the crude oil battle is well and truly on", Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai told Reuters.
Following the Russia-Saudi statement, Kazakh Energy Minister Kanat Bozumbayev said "Kazakhstan should follow the trend", in comments reported by Russia's RIA Novosti agency.
However, last year Saudi officials agreed to the first cut in production for eight years.
Saudi, the de facto leader of OPEC, and Russian Federation, the world's biggest producer, together control a fifth of global supplies, but have been spurred into action as crude futures LCOc1CLc1 have languished around $50 per barrel. According to them, when the stock price of oil falls below $50 per barrel, people tend to purchase the commodity and sell it when it reaches to $50 per barrel or more than that.
OPEC agreed at a meeting in November 2016 to reduce oil production by 1.2 million barrels a day from the October levels. Several non-members, including Russian Federation, agreed in December to contribute a combined 600,000 barrels a day of output reductions.
It didn't really work, so Opec and a few other producers cut production hoping to revive prices.
"Growth was weaker than expected in the first quarter, however, with notable downward revisions seen in the U.S. - where demand is essentially flat - and in Germany, Turkey and India", the report said.