Feb. 16 (UPI) -- Oil prices got a modest lift early Thursday on word OPEC may be upping the production cut ante, but gains were balanced by signs of Russian production growth.
A research note emailed from broker PVM suggests delegates at a May meeting of members of the Organization of Petroleum Exporting Countries may consider deeper cuts than already implemented under a six-month deal that began in January.
Libya and Nigeria are exempt from the deal and Iran has room for production growth as it seeks to regain a market share lost to sanctions. Saudi Arabia, the largest producer and de facto head of OPEC, has cut its output more than any other and total group production is already below the 32.5 million barrels per day target.
PVM finds the May meeting could lead to an extension of the deal for another six months, though market reactions were muted as the November provision mandating the cuts already included a clause on a six-month extension.
The price for Brent crude oil was up 0.6 percent from the previous close to $56.10 about a half hour before the start of trading in New York. West Texas Intermediate, the U.S. benchmark price for oil, gained 0.5 percent to $53.41 per barrel.
Crude oil prices came under heavy pressure last year as markets favored the supply side, leading OPEC to intervene in an effort to restore balance. Olivier Jakob, managing director of Switzerland-based consultant Petromatrix, said in an emailed report that OPEC cuts so far aren't enough to reduce global supplies, "they are just enough to maintain supply about unchanged versus last year."
Elsewhere, PVM reports that Russian crude oil exports could increase by more than 5 percent this year even as it clings to its commitments to OPEC's managed decline agreement as a non-member participant. For other non-members, Norway, which is not party to the agreement, said job openings were on the rise in its oil and gas sector.
U.S. Federal Reserve Chair Janet Yellen this week painted a picture of general optimism, giving markets a boost. Markets, however, could be tempered further by reports from the U.S. Labor Department on first-time claims of unemployment.
Labor has been a lingering bright spot for the U.S. economy, though seasonally adjusted initial claims for the week ending Feb. 11 showed an increase of 5,000 from the previous week.
The less-volatile four-week moving average showed an increase of 500 and the previous week's average was revised upward in parallel.