Oil prices firmed on Friday as market sentiment was lifted by a report that OPEC could extend production cuts in order to have a significant impact on a global fuel oversupply.

Brent crude futures traded up 8 cents from their last settlement at $55.73 per barrel. Meanwhile, U.S. WTI crude futures rose 7 cents at $53.43 per barrel.

The producer cartel and other producers have reached an accord last year to lower their production by the first half of the year, and have managed to have around 90% compliance rate of the agreed upon 1.8 million bpd cut. The reductions were made to curb the oil glut that has persisted in oil markets since 2014.

Still, inventories continued to swell and supplies high despite these actions, particularly in the U.S. Last week, crude inventories surged by 9.5 million barrels, almost threefold of analysts estimate. Gasoline stocks added 2.8 million bpd during the same period, contrary to the seen 752, 000 barrel decline.

In order to further aid in rebalancing the market, OPEC sources told Reuters that the pact could be extended if all major exporters fully complied to the agreement. Traders stated that until more details regarding a possible extension of production cuts was attained, oil prices' gains would be limited.

Asian stocks traded sideways Friday on news that China's banking watchdog increased its scrutiny over loans for overseas asset purchases and as crude prices slightly climbed after increasing 10-month lows overnight.

News reports mentioned that Chinese authorities had asked financial institutions to look into their exposure to Chinese entities engaged in huge acquisitions over the past few years. Also, oil prices recorded modest gains, although concerns remained over the supply glut in markets. US crude stood at $42.87, up 0.3%. Brent crude traded at $45.37, up 0.33%.

The Shanghai Composite Index, which trimmed previous losses, tumbled 0.2% after the news. Japan's Nikkei 225 gained 0.12%, while South Korea's Kospi increased 0.09%. Australian shares rose 0.06%. However, Shenzhen Composite lost 0.757%.

Crude oil prices managed to rebound and recover some of the steep losses earlier in the week. However, it is still set for the worst first-half performance in 20 years in spite of efforts to shore up prices.

Brent crude futures traded at $45.39 per barrel, rising 17 cents from their last close or 0.3 percent. Meanwhile, U.S. WTI crude futures traded up 17 cents or 0.4 percent at $42.91 per barrel.

Oil prices have declined by almost 20 percent this year despite of an initiative led by OPEC to reduce output by 1.8 million bpd that has been implemented since January. That is the worst first-half performance for crude since 1997.

The tepid markets are due to doubts regarding OPEC's ability to curb a crude supply overhang that has affected the markets since 2014 as productions continue to largely outpace demand. The rising activity of U.S. oil producers has also undermined efforts by OPEC and other exporting countries who joined the production cut deal.

U.S. government bond yield fell slightly after the Republican Party's Senate bill to revamp health care was challenged by internal opposition, showing the divide within the party that could hinder President Donald Trump's pro-growth plans.

The yield on the 10-year Treasury note slid 0.4 bps to 2.153 percent, but largely retained its level from the prior session. Yield on the two-year note fell 0.8 bps to 1.344 percent. Meanwhile, the 30-year bond yield, which are reactive to inflation outlook, was almost unmoved at 2.724 percent but remains at its lowest level since November 8.

Debt yields slightly slid after the Republicans unveiled a health-care bill that has struggled to gain consensual support within the party. Without the unanimous backing, experts said the legislation is unlikely to get rubber stamped. Opposition to the bill has risen from different levels of the party that feel the bill has been thinned down and maintains too much of Obamacare's current provisions in place.

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Jun 24 at 15:44 UTC

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