Oil prices flat in choppy trade, output cut signal

Leading Gulf oil exporters Saudi Arabia and Kuwait gave a clear signal on Thursday that Opec plans to extend into the second half of the year a deal with non-member producers to curb supplies of crude.

Oil prices were little changed on Thursday in a seesaw trading session, as investors weighed rising U.S. production against comments from leading Gulf oil producers that an extension to Opec-led supply cuts was likely.

Brent futures were up 15 cents to $53.08 a barrel were at 11:40 a.m. EDT (1540 GMT). U.S. crude futures were up 6 cents at $50.50 a barrel.

Consensus is growing among oil producers that a supply restraint pact that started in January should be prolonged after its initial sixmonth term, Saudi Energy Minister Khalid al-Falih said.

"There is consensus building but it's not done yet," Falih told reporters at a conference in the United Arab Emirates.

Kuwait's oil minister Essam alMarzouq said he expected the agreement to be extended.

"Russia is on board preliminarily ... Compliance from Russia is very good," Marzouq said. Opec Secretary-General Mohammed Barkindo, noting that Marzouq chairs a committee that measures compliance with the cuts, said: "It is significant that the Kuwaiti minister has come out in public and said this."

Opec is keen that nonmember producers play their promised part in supporting the group's efforts to lift prices, which have recovered to $53 a barrel from lows last year below $30.

The Organization of the Petroleum Exporting Countries and non-Opec meet on May 25 to discuss extending the curbs that total 1.8 million barrels daily, two-thirds of that from the Opec.

Opec sources said an internal assessment was that if they failed to extend the agreement, oil could slide back to $30-$40 a barrel.

Falih said his main concern was to reduce global oil inventories, calling that "the main indicator for the success of the initiative".

While inventories held at sea and in producer countries have dropped, they remain stubbornly high in consumer regions, particularly in Asia and the United States.