By Sabina Zawadzki
LONDON (Reuters) - Oil prices firmed on Friday and looked set to finish the week with a modest gain after losing almost 10 percent last week on concerns that an OPEC production cut was failing to reduce a global supply overhang.
Crude traded in a narrow band this week, with Brent and West Texas Intermediate bouncing in a $2.5 range as investors weighed the impact of the first oil cut from OPEC in eight years against rising U.S. shale oil output and high inventories.
Brent crude was up 27 cents at $52.01 a barrel by 1353 GMT. U.S. light crude was up 24 cents at $48.99.
"The market remains relatively calm today, with concerns about having to extend the production-cut deal being offset by a weaker dollar," said Saxo Bank head of commodity strategy Ole Hansen.
Oil found some support from dollar weakness after the U.S. Federal Reserve indicated it would not accelerate plans for rises in interest rates.
Saudi Energy Minister Khalid al-Falih said on Thursday the cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers could be extended beyond June if oil stockpiles stayed above a long-term average.
Six of 10 analysts polled by Reuters said they believed OPEC would prolong its output reductions past the deal's six-month duration.
However, Saudi Arabia has cut output by more than its share under the November 2016 deal. Some ask whether Riyadh has the appetite to continue while several OPEC and non-OPEC states fail to comply.
"While OPEC has shown more cohesion than we expected, the problem has always been that free-riders benefit most from OPEC cuts, which makes the deal inherently unstable," Dan Smith of Oxford Economics said in a note to clients.
"Saudi Arabia is not prepared to shoulder all of the burden of rebalancing the oil market and if others fail to cooperate then it may prove to be difficult for OPEC to extend cutbacks beyond the middle of this year."
OPEC and non-OPEC members agreed last year to cut output by a combined 1.8 million barrels per day (bpd) in the first half of 2017. But OPEC's monthly report showed global oil stocks rose in January to 278 million barrels above the five-year average.
The market will seek more direction from data due later on Friday. The Baker Hughes weekly rig count will indicate activity in the U.S. shale industry, and the U.S. Commodity Futures Trading Commission releases calculations of net long and short positions in the crude futures market.
(Additional reporting by Jane Chung; Editing by Edmund Blair and Dale Hudson)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)