Oil prices edged up in early trading on Friday, extending gains from the previous session on expectations that exporters could at an upcoming meeting talk about ways to prop up a market that continues to be dogged by a supply overhang.
International Brent crude oil futures were trading at $46.20 per barrel at 0047 GMT, up 16 cents, or 0.35 per cent, from their last close and not far off their $46.30 monthly high reached in the previous session.
US West Texas Intermediate (WTI) crude futures were at $43.71 a barrel, up 22 cents, or 0.51 per cent, from their last close.
Markets were supported as Saudi Arabia's energy minister Khalid al-Falih said in a statement late on Thursday that oil producers would discuss during a meeting next month in Algeria potential action to stabilise oil prices.
"Talk of production cuts in the oil market saw prices surge overnight," ANZ bank said on Friday.
An outlook published by the International Energy Agency (IEA) that said it expected a tightening supply and demand balance towards the end of the year also supported prices.
Oil prices are still some 12.5 per cent below their last peak in June as brimming storage tanks and production that exceeds consumption weighs on markets.
AB Bernstein said that global oil production increased by almost 0.8 million barrels per day (bpd) in July, compared to the previous month, to 97.01 million bpd, while commercial inventories increased by 5.7 million barrels to 3.09 billion barrels in June.
Despite relatively cheap crude feedstocks prices, analysts said that refinery margins, known as cracks, were poor as refiners continued to pump more fuel than the market can absorb, resulting in brimming storage tanks around the world.
"Global refining margins trended downwards in July. Brent cracking margins were $3.02 per barrel in July (down from $4.85/barrel in June) with Europe's refining utilisation at 82 per cent in June. US Gulf Coast cracking margins were $5.06 per barrel (-$0.03 per barrel month-on-month) with utilisation of 87 per cent. Singapore cracking margins were $4.74 per barrel (-$1.03 per barrel month-on-month)," AB Bernstein said.