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Oil prices firmed on Friday as market sentiment was lifted by a report that OPEC could extend production cuts in order to have a significant impact on a global fuel oversupply.
Brent crude futures traded up 8 cents from their last settlement at $55.73 per barrel. Meanwhile, U.S. WTI crude futures rose 7 cents at $53.43 per barrel.
The producer cartel and other producers have reached an accord last year to lower their production by the first half of the year, and have managed to have around 90% compliance rate of the agreed upon 1.8 million bpd cut. The reductions were made to curb the oil glut that has persisted in oil markets since 2014.
Still, inventories continued to swell and supplies high despite these actions, particularly in the U.S. Last week, crude inventories surged by 9.5 million barrels, almost threefold of analysts estimate. Gasoline stocks added 2.8 million bpd during the same period, contrary to the seen 752, 000 barrel decline.
In order to further aid in rebalancing the market, OPEC sources told Reuters that the pact could be extended if all major exporters fully complied to the agreement. Traders stated that until more details regarding a possible extension of production cuts was attained, oil prices' gains would be limited.
