* OPEC-led production cut was planned only for H1 2017
* OPEC may extend cuts beyond June to help rebalance markets
* Analysts say healthy demand may also help rein in
By Henning Gloystein
SINGAPORE, March 21 Oil prices rose early on
Tuesday on expectations that an OPEC-led production cut to prop
up the market could be extended, and as strong demand was seen
to slowly erode a global fuel supply overhang.
Prices for front-month Brent crude futures, the
international benchmark for oil, were at $51.76 per barrel at
0043 GMT, up 14 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 6
cents, or 0.1 percent, at $48.28 a barrel.
The Organization of the Petroleum Exporting Countries
(OPEC), together with other producers including Russia, has
pledged to cut its output by almost 1.8 million barrels per day
(bpd) between January and June in an effort to prop up prices
and rein in a global supply glut that has dogged markets for
almost three years.
Yet so far the cutback has not had the desired effect as
compliance by involved exporters is patchy and as other
producers, including the United States, have stepped up to fill
the gap, resulting in crude prices falling more than 10 percent
since the beginning of the year.
To halt the decline, OPEC members increasingly favour
extending the pact beyond June to balance the market, sources
within the group said, although they added that this would
require non-OPEC members like Russia to also step up their
Traders also said that healthy oil demand would help
rebalance markets and support prices.
"Global demand for 2017 is expected to remain healthy and
surpass long-term average growth in demand of 1.2 million
barrels per day by between 0.2 and 0.4 million barrels per day.
As such, the combination of robust demand and weaker global
supply leading to rebalanced markets will not be de-railed by
U.S. shale oil," said Jeremy Baker, Senior Commodity Strategist,
at Vontobel Asset Management.
Baker said this would "support the case for a shift from
contango to backwardation in the crude markets during the
Contango describes a market structure in which prices for
future delivery of a product are higher than current ones, while
backwardation is price curve in which spot prices are more
expensive than future deliveries.
The Brent futures forward curve currently shows a
slight contango shape, in which prices for May delivery are 62
cents below those for delivery in January 2018.
(Reporting by Henning Gloystein; Editing by Richard Pullin)