TOKYO: Oil prices extended gains on Friday on optimism that non-OPEC producers would agree to cut output following a cartel agreement to limit production, but the upside was limited amid uncertainty over the size of the production curbs.
The Organization of the Petroleum Exporting Countries (OPEC) will meet non-OPEC nations in Vienna on Saturday seeking their help in curbing a global supply glut. Azerbaijan has said it will come to the Austrian capital armed with proposals for its own reduction.
London Brent crude for February delivery was up 17 cents at $54.06 a barrel by 0612 GMT, after settling up 1.7 percent on Thursday. The contract hit its highest since July 2015 at $55.33 on Monday.
NYMEX crude for January delivery was up 33 cents at $51.17 a barrel. Both contracts are set for a weekly decline of around 1 percent.
Russia has said it would cut 300,000 barrels per day, meaning other non-OPEC producers combined would need to pledge the same amount to lower output by the 600,000 bpd OPEC wants - half the reduction OPEC is making.
"There are hopes for deeper cuts as non-OPEC nations are set to cooperate in curbing production," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.
"But it is still uncertain whether their cuts would reach 600,000 bpd, which is providing limited support to oil gains."
BMI Research said the pace of structural output declines as well as technical challenges surrounding Russian production suggests the 600,000 bpd target will be difficult to achieve in full.
OPEC last week agreed to slash production by 1.2 million bpd in the first half of 2017, that bolstered crude futures despite doubts over whether the amount was enough.
Meanwhile, Saudi Arabia and Iraq will supply full contractual volumes of crude oil to Asian buyers in January despite OPEC's decision to cut production, sources said on Friday.
Venezuelan President Nicolas Maduro said on Thursday he had agreed with Iran to call for a summit of heads of state from OPEC and non-OPEC countries in the first quarter of next year to decide on strategy for the oil market.
Global spending on oil and gas exploration in 2017 could fall below this year's $40 billion, consultancy Wood Mackenzie said.
The market is waiting on weekly data on US oil rig counts issued by oil services firm Baker Hughes later on Friday.
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