Crude oil is hovering just above the psychological of $50. Meanwhile, the international benchmark, Brent oil, is at $53.1.
After weeks of declines, oil has finally seen a boost thanks to energy ministers from Saudi Arabia and Russia supporting the extension of production cuts until March of next year.
OPEC and its allies will convene next week in Vienna to devise a plan which will cut the supply of oil.
Few members of the cartel have come forward to talk of a significant recovery in prices, perhaps this is an indication of how much confidence participants have lost in the scheme.
When OPEC first began to reduce production, analysts predicted that US output would fall in 2017 by 150,000 barrels per day.
However, shale drillers came back in force, showing the world they can compete at $50 a barrel. Now, the same analysts are forecasting that US production will amount to 1 million barrels per day, that’s a 820,000 increase in output per day between last November to May.
With nearly all members of the cartel complying to the agreed upon production cuts and the eventual co-operation of Russia, the supply deal has been a mild success.
The aim of chipping down record inventories, which have built up since the oil glut of 2014, has barely been touched because of the rejuvenation of the US shale industry and what appears to be waning demand for oil.