By Henning Gloystein
SINGAPORE (Reuters) - Oil prices rose by one percent ahead of an OPEC meeting on Thursday that is expected to extend output cuts into 2018, adding at least nine months to an initial six-month cut in the first half of this year.
Brent crude futures were trading at $54.51 per barrel at 0209 GMT, up 55 cents, or 1 percent from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $51.87, up 51 cents, or 1 percent.
Both benchmarks have risen well over 16 percent from their May lows.
Prices have risen on a consensus that a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to cut supplies by 1.8 million barrels per day (bpd) would be extended into 2018, instead of covering only the first half of 2917.
Speculation was rife that the cuts may be extended by nine and possibly 12 months, said Jeffrey Halley, analyst at futures brokerage OANDA in Singapore.
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The production cut, introduced in January, was initially only to cover the first half of 2017, but an ongoing glut has put pressure on OPEC and its allies to extend the cut at a meeting in Vienna on Thursday.
"This (extension) has been highly factored into the price of oil, and at this stage it is unlikely that we will see a deepening in the level of production cuts, with OPEC officials preferring to wait and see the impact of an extension in helping rebalance the market prior to taking any more drastic actions," said James Woods, analyst at Australia's Rivkin Securities.
Energy consultancy Wood Mackenzie said a nine-month extension "would have little impact on our price forecast for 2017, which is for an annual average of $55 per barrel for Brent."
It estimated that a nine-month extension would result in a 950,000 bpd production increase in the United States, undermining OPEC's efforts.
U.S. oil production has already risen by more than 10 percent since mid-2016 to over 9.3 million bpd as its drillers take advantage of higher prices and the supply gap left by OPEC and its allies.
Should the meeting in Vienna result in a cut extension to cover all of 2018, Wood Mackenzie said the tighter market could push average 2018 Brent prices up to $63 per barrel.
Brent has averaged $53.90 per barrel so far this year.
Should the meeting in Vienna fail to agree an extended cut, traders expect oil prices to fall as this would result in ongoing oversupply.
(Reporting by Henning Gloystein; Editing by Richard Pullin)