By Keith Wallis
SINGAPORE (Reuters) - Oil futures extended gains on Thursday after rising nearly 6 percent the day before on a surprise move by OPEC to curb crude output.
The Organization of the Petroleum Exporting Countries agreed to limit its production to a range of 32.5-33.0 million barrels per day (bpd) in talks held on the sidelines of an energy conference in Algeria.
But how much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.
"The decision really took market by surprise - prices took a big leap, now there's pause for reflection," said Ben Le Brun, markets analyst at Sydney's OptionsXpress.
"An agreement to have an agreement - I don't know where that leaves us," he said.
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A drop in U.S. crude stocks for the fourth straight week also supported oil prices.
U.S. West Texas Intermediate (WTI) crude had risen 28 cents to $47.33 a barrel by 0020 GMT, after closing the previous session up $2.38, or 5.3 percent.
Brent crude climbed 31 cents to $49.00 a barrel, having settled up $2.72, or 5.9 percent.
"More cynical traders have pointed out the complete lack of detail, including the potentially problematic question of which nations will curtail production," said Michael McCarthy, chief market strategist at Sydney's CMC Markets.
"A 6-percent jump in crude prices makes a nice headline, but is within normal bounds for the currently highly volatile energy markets. Although this rally may quickly fade, energy stocks are likely to receive a boost at this morning's opening," McCarthy said.
OPEC will agree to production levels for each member country at its Nov. 30 meeting in Vienna, group officials said.
That came as U.S. crude stocks fell 1.9 million barrels to 502.7 million barrels in the week to Sept. 23, against analyst expectations for a 3 million barrel increase, data from the U.S. Department of Energy's Energy Information Administration showed. [EIA/S]
"U.S. crude oil inventories are at historically high levels for this time of year," EIA said in a statement.
Inventories were expected to rebound after the big drop a few weeks ago, but instead stocks have continued to decline with imports.
While oil prices remained range-bound at between $40-50 a barrel, a push beyond $50 barrel could see "shale oil producers turn the taps back on", said Le Brun at OptionsXpress.
"If this proposed (output) cut is strictly enforced and supports prices, we would expect it to prove self defeating medium term with a large drilling response around the world," Goldman Sachs said in a note.
(Reporting by Keith Wallis; Editing by Joseph Radford)