Zawiya Oil Refinery Libya
Brent and WTI futures rose as market factored in the impact of fresh output cuts by major oil exporters.Reuters

Oil benchmarks spiked by nearly 2% on Friday (19 May), as traders continued to price in production cuts and extended their long plays, or bets in favour of rising prices, based on robust statements on lowering production from major oil exporters.

Opec members Kuwait and Venezuela reiterated their support of extending an agreement to cut crude production, originally designed to end in June 2017, for a further nine months until March 2018. Meanwhile, Algeria claimed an extension to Opec's production curbs would be backed by "most" of its fellow Opec members.

Elsewhere non-Opec producers Oman and South Sudan have also indicated they would back coordinated cuts led by Opec. On Monday, Saudi Arabia and Russia, two of the world's largest oil producers, said they would do "whatever it takes" to reduce the current oil glut.

At 3:09pm BST, the Brent front month futures contract was up 1.71% or 84¢ to $53.41 per barrel, holding firm above the psychological $50 level.

Concurrently, the West Texas Intermediate (WTI) also rose above $50, coming in at $50.19 per barrel, up 84¢ or 1.73%. FXTM research analyst Lukman Otunuga said although Opec members may be commended on their ability to repeatedly boost the market on production cut talks, the effects could wear out soon.

"Oil prices may be exposed to further volatility moving forward as the fierce tug of war between Opec bulls and US shale bears gets underway. While most expect production cuts to be extended until March 2018, I think it's more of a question on how American producers exploit this opportunity to pump more oil into the markets."

Meanwhile, demand remains a concern. The International Energy Agency (IEA) downgraded its 2017 US demand growth expectations to zero. Overall the IEA's global demand outlook has been revised down only by a marginal 45,000 barrels per day (bpd) compared to last month's report and is now seen at 1.3 million bpd.

Away from the oil market, gold futures headed sideways as traders looked to cash in on the recent price spike. At 3:18pm BST, the Comex gold futures contract for June delivery was down 0.15% or $1.90 at $1,250.90 an ounce, while spot gold was up 0.42% $5.19 to $1,252.26 an ounce as US President Donald Trump's political tussles continued to support prices.

Fawad Razaqzada, technical analyst at Forex.com, said the key question now is what will happen in the equity markets and with the dollar.

"If stocks and the dollar both manage to show relative strength again, then this should pressurise the buck-denominated and perceived safe-haven gold. Conversely, gold will remain in demand should risk sentiment stays cagey."

Elsewhere, Comex silver for July delivery was up 0.87% or 15¢ to $16.82 an ounce while spot platinum was up 1% or $9.32 to $942.20 an ounce.