Oil futures recovered from recent lows on Tuesday (28 March) with market sentiment turning yet again in favour of oil production cuts, instituted by 11 non-Opec producers in concert with Opec, being extended.
The historic agreement, a first of its kind in 15 years, was inked by both sets of producers in December 2016. It was designed to take almost 1.8m barrels per day (bpd) of crude oil production offline and is due to expire towards the end of June.
Overnight, Qatar's energy minister and its chief Opec envoy Mohammed Saleh Al-Sada told the Qatar-UK Business and Investment Forum in London that the agreement should be extended "beyond the third quarter of 2017" for the crude market stockpile overhang to ease.
"Opec and non-Opec producers are trying to stabilise both the supply and demand balance, as well as the stockpile overhang. Opec has complied by up to 96% of the cuts it promised, while non-Opec compliance is almost at 65%; this is unprecedented.
"Of course, the demand side depends on macroeconomic factors beyond our control. I feel it is the stockpile overhang, in the region of 285 million barrels, which needs to be taken away; only then can the market be fully balanced."
Al-Sada opined that he would "like Opec cuts to continue" so that the market can be rebalanced. "If the cuts are extended, we should get that sense of balance around the third quarter of 2017."
Al-Sada's comments come as oil benchmarks continue to slide in the face of rising US crude production, with the West Texas Intermediate (WTI) having fallen below $50 for the first time in 2017. Over the weekend, Opec's monitoring committee also leaned in favour extending the cuts, although a formal announcement is not expected before 25 May.
Meanwhile, the latest Baker Hughes rig data showed yet another jump in the number of operational US oil and gas rigs, up 345 to 809, compared to the same week in 2016.
At 12:46pm BST, the Brent front month futures contract was up 0.85% or 43cents to $51.18 per barrel, while the WTI was up 0.88% or 81 cents to $48.15 per barrel, with both benchmarks gaining nearly a dollar in overnight trading.
Analysts at Vienna-based JBC Energy said: "A primary concern remains how long Opec and other oil producers will be willing to support growth in US shale production. For stable – or higher – oil prices to materialise, each barrel produced in the US would in theory need to be offset by lower production elsewhere."
Away from the oil market, precious metals were marginally on negative turf following an overnight rally on a weaker dollar.
At 1:01pm BST, the Comex gold futures contract for June delivery was down 0.05% or 10 cents intraday to $1,258.80 an ounce, while spot gold was trading at $1,256.87 an ounce, up 0.16% or $2.01.
FXTM research analyst Lukman Otunuga said the direction of the dollar and renewed concerns over protectionism, Brexit unknowns and Trump jitters boosted gold's allure with the metal on route to concluding the quarter as a winner.
"Uncertainty is rapidly rising over Trump's economic policies and this has caused investors to depart from riskier assets to safe-haven investments such as the yen and gold. With the live threat of Trump's highly anticipated pro-growth policies falling below market expectations, risk-off may become the name of the game consequently uplifting gold further."
Elsewhere, Comex silver was down 0.04% or 1 cent to $18.09 an ounce, while spot platinum was 0.19% or $1.83 lower at $966.57 an ounce.