March 24 (UPI) -- Oil prices moved into positive territory early Friday on expectations that OPEC could extend the terms of an agreement to curb production to balance the market.
Crude oil prices came under pressure for most of the week on signs of steady growth in U.S. crude oil production and inventory levels. Gains in U.S. shale oil output over the last few years, coupled with a previous policy from the Organization of Petroleum Exporting Countries to defend a market share with robust production, tipped the market scales toward oversupply, pushing oil prices below $30 per barrel last year.
OPEC in January started implementing a deal to offset the glut with managed declines, and members of a monitoring committee meet in Kuwait during the weekend to consider extending the agreement.
Vandana Hari, an industry analyst for Vanda Insights, said in a newsletter this week's rout in crude oil prices would give OPEC's de facto leader Saudi Arabia the leverage it needs to ensure strict compliance and wider participation with the agreement.
"[Saudi Energy Minister Khalid al-Falih's] peers within and outside OPEC would not want a return to the $40s any more than Saudi Arabia does," she noted.
Crude oil prices moved in to the mid-$50 range after the initial agreement went into force in January, but pulled back recently on U.S. supply pressures. Markets reacted positively ahead of the weekend meeting, with Brent crude oil gaining 0.4 percent from the previous session to trade at $50.76 per barrel about a half hour before the start of trading in New York. West Texas Intermediate, the U.S. benchmark price for oil, was 0.6 percent higher at $47.97 per barrel.
The move in oil prices early Friday could reflect industry optimism after pipeline company TransCanada received a necessary permit from the U.S. government for its long-delayed Keystone XL pipeline, though any momentum there will likely evaporate by Monday.
Elsewhere, data reflecting the pace of exploration and production activity from oilfield services company Baker Hughes could bring supply-side concerns back to the surface, especially if weekly rig counts show gains in the United States. Broader markets could face pressure amid lingering U.S. political debates over a Republican replacement for the Affordable Care Act, known commonly as Obamacare.
Russia's Central Bank, meanwhile, said Friday it was cutting its lending rate by a quarter percent, its first reduction since September. The bank's board of directors said growth would be slow, with gains for gross domestic product of more than 2 percent unlikely until 2018 at the earliest.
In its forecast, the bank said it was taking a conservative approach and assuming a decline in oil prices to around $40 per barrel by the end of the year.