Oil rose on Monday, reversing earlier losses, after sources said OPEC and its partners were considering extending their existing supply deal possibly into next year, which helped offset the bearish impact of more increases in U.S. crude output.
Brent crude was up 34 cents at $49.44 a barrel at 1410 GMT, having recovered from a session low of $48.65. U.S. light crude was up 35 cents at $46.57 a barrel, up from an intraday low of $45.83.
Industry sources and sources in OPEC said the group and its non-OPEC partners were considering an extension to the current deal, which comprises an output cut of 1.8 million barrels per day (bpd), for nine months or more.
The efforts of the Organization of the Petroleum Exporting Countries to reduce global oil inventories have been undermined by a surge in U.S. drilling, which has knocked more than 10 percent off the price of oil in the last month.
OPEC meets on May 25, when it is expected to discuss prolonging the cuts to the end of 2017, although analysts say a further extension may not be enough.
“The market is in a very dangerous condition,” said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates. “The trend is still down, but just correcting.”
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