Diesel futures rose 3.74 cents, or 2.4%, to $1.5827 a gallon.
Brent crude futures were down 21 cents, or 0.4 per cent, from their last close at $52 per barrel at 0148 GMT. Their output increase is equal to about half of the Opec cuts and twice that of Russia's cuts, according to a report out this week by Eugen Weinberg, head of commodity research at Commerzbank.
Consequently, despite the production cuts being wiped out by the increasing USA supply, Saudi Arabia, the largest producer and defacto head of the OPEC, along with Russian Federation, has shown its willingness to extend the proposed 1.8 million (bpd) supply restrictions until March 2018. Meanwhile, production in the USA has been increasing, threatening to derail the group's goal.
As with other markets, concerns about US President Donald Trump's agenda amidst investigations in Washington faded into the background. "The extension alone should result in deeper cuts", he said, stressing that U.S. production would stop the rebalancing of the market this year.
The country is also proposing to set up a high-level committee of experts to advise Opec and nonOpec ministers on extending or curtailing the curbs, he said.
The latest Oil Market Report (OMR) issued on Tuesday, comes about one week before the scheduled ministerial meeting on May 25 by the Organization of the Petroleum Exporting Countries (OPEC), the global energy watchdog noted.
Oil benchmarks spiked by almost 2% on Friday (19 May), as traders continued to price in production cuts and extended their long plays, or bets in favour of rising prices, based on robust statements on lowering production from major oil exporters. Oil rose back above US$50 (RM216) a barrel to a one-month high on growing confidence that Opec will maintain its efforts to diminish a global glut. Macquarie Group now thinks production will increase 1.4 million barrels a day through December, up from a previous growth estimate of 0.9 million barrels a day.
OPEC wants oil for immediate delivery to trade at a premium to crude sold for future shipment because the current market structure - contango - benefits the cartel's competition. "On the other, there are those who are focused on the real drawdowns that have started to occur in USA oil stocks over the past month or so", he said.
"Even before the Saudi-Russian statements, I thought they were extending the cuts to year's end", Stewart Glickman, energy equity analyst at CFRA in NY, said by phone.
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