Picture: REUTERS
Picture: REUTERS

Tokyo — Oil futures rose on Friday to the highest in nearly a month on the growing optimism that big producing countries will extend output cuts to curb a persistent glut in crude, with key benchmarks heading for a second week of gains.

Brent crude was up 34c, or 0.7%, at $52.85 at 3.58am GMT. The contract earlier rose to the highest since April 21 and is on track for a 4% climb this week, its second week of gains.

US crude oil was up 38 cents, or 0.8%, at $49.73 a barrel, highest since April 26. The contract is heading for a weekly increase of 4%. Since the beginning of March, crude prices have swung from over $56 a barrel to less than $47 as market participants were divided over the effect of rising output from the US versus production cuts by the oil cartel Opec and other countries, including Russia.

But market watchers are growing more confident that Opec, Russia and other big producers will extend cuts of almost 1.8-million barrels a day until the end of March 2018. US producers are not party to any agreements capping production.

As with other markets, concerns about US President Donald Trump’s agenda amid investigations in Washington faded into the background.

"With the political turmoil easing in the US overnight, the market will return to the fundamental drivers," ANZ said in a research note.

"This should see oil prices remain well bid, as Opec continues to talk up a continuation of the production cut agreement," it said.

On May 25, leaders from Opec and other producing countries will meet in Vienna to decide on output policy.

Rosneft, the largest oil producer in Russia, will meet agreements with Opec on oil output reductions, the company’s CE told reporters in Berlin on Thursday.

Still, there are signs that Saudi Arabia, Opec’s largest producer, is keeping markets well supplied.

Crude exports from Saudi Arabia rose by 275,000 barrels a day in March from February and stockpiles rose, official data showed late on Thursday.

"The battle between bulls and bears is raging on oil," said Greg McKenna, chief market strategist at CFD and forex provider AxiTrader.

"On the one hand, you have traders who worry about the efficacy of Opec’s oil cuts on inventory levels. On the other, there are those who are focussed on the real drawdowns that have started to occur in US oil stocks over the past month or so."

Reuters

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