* Russia's Rosneft agrees to adhere to production cuts
* Algeria says most countries support extention cuts
* U.S. crude inventories fall less than expected
* Oil supplies ample despite OPEC-led production cuts
* Record volumes of North Sea, U.S. oil shipped to Asia
(Updates prices, adds context, adds quote)
By Julia Simon
NEW YORK, May 18 Oil prices settled higher on
Thursday, as key producing countries suggested they would extend
supply cuts to reduce an ongoing global crude glut.
Brent crude settled up 30 cents at $52.51 a barrel,
or half a percent. U.S. crude oil settled at $49.35 a
barrel, up 28 cents, for the highest close since April 26.
Market watchers are growing more confident that the
Organization of the Petroleum Exporting Countries (OPEC) and
other producers including Russia will extend output cuts of
almost 1.8 million barrels per day (bpd) until the end of March
Russia's largest oil producer Rosneft will meet agreements
with OPEC on oil output reductions, Igor Sechin, Rosneft chief
executive, told reporters in Berlin.
Algeria, the African oil producer that played a key role
bringing together support for OPEC's output deal last year, said
that most participating nations back a nine-month extension of
"The majority of the countries support the proposition of
Russia and Saudi Arabia," Algerian Energy Minister Nouredine
Bouterfa told reporters after meeting his Russian counterpart in
Both benchmarks rose on Wednesday after news of a drawdown
in U.S. crude inventories and a dip in U.S. output. The U.S.
Energy Information Administration said inventories
fell 1.8 million barrels in the week to May 12 to 520.8 million
In addition to U.S. crude stocks drawing down for the sixth
consecutive week, the EIA showed an increase in refining rates.
But Michael Dei-Michei, head of research at JBC Energy in
Vienna, said the market should consider that intermediate
products - gas oils, diesel oil and other products - are not
featured in the headline EIA numbers, and those stocks are
rising, which could lead to higher finished product inventories.
That could slow the supply drawdown.
"The effects of higher crude runs may not have fully
filtered through yet, with stocks of unfinished oils having
risen strongly over recent weeks, meaning that the headline
categories should start to reflect some of this in the near
future," he said.
On May 25, leaders from OPEC and other producers will meet
in Vienna to decide on output policy. The group is expected to
prolong its agreement to limit production for up to nine months.
However, Gene McGillian, vice president of market research
at Tradition Energy, said with increased production in Libya and
Nigeria, as well as the United States, sticking to current cuts
might not be enough.
U.S. crude production has climbed 10 percent since mid-2016
to 9.3 million barrels per day, close to levels from top
producers Russia and Saudi Arabia.
(Additional reporting by Christopher Johnson in London, Henning
Gloystein; Editing by Chizu Nomiyama)