Oil prices were heading on Friday for a second week of gains, trading above $53 a barrel, on growing expectations that producers will agree further steps to support the market when they meet next week.
The expected increase in OPEC's net export earnings is attributed to slightly higher forecast annual crude oil prices in 2017 as well as slightly higher OPEC output during the year. JPMorgan is forecasting USA shale to grow by 1.05 million barrels a day next year, while Bank of America Merrill Lynch has a figure of 950,000 barrels a day. Meanwhile, Algeria claimed an extension to Opec's production curbs would be backed by "most" of its fellow Opec members. Nothing has been decided yet, but deeper cuts are on the table of discussions, depending on estimates of how fast and how much non-OPEC producers, most notably the USA, would raise supply, according to an OPEC source who talked to Reuters.
OPEC and eleven non-OPEC producers had agreed late a year ago to cut production by 1.8 million barrels per day, in what was later known as the Vienna Accords.
But government figures on Wednesday showed the first week-to-week drop in domestic oil production since February, a development which also helped lift crude prices this week and get light, sweet crude back toward $50.
Brent crude settled up US$1.10, or 2.1 per cent, at US$53.61, the highest settlement for the global benchmark since April 18.
OPEC and the other producers are likely to cut oil production even more than the current 1.8 million barrels a day, according to Ed Morse, global head of commodities research at Citigroup.
Some oil market observers believe OPEC's influence is waning.
Non-OPEC oil supply in 2016 was revised down by 18,000 barrels per day due to a downward revision of Russian oil supply in fourth quarter of 2016 to average 57.30 million barrels per day - indicating a year-on-year decline of 0.71 million barrels per day.
"If he had to go for whatever reason, US oil demand is likely to suffer but the fall is unlikely to be significant", he said.
Storage costs have come down and while prices and demand remain stagnant, oil supply remains high.