* Iraq, Algeria favour OPEC cut extension -minister
* U.S. crude inventories fall more than expected, API
* Libya production hits 800,000 bpd -National Oil Corp
* U.S. government data on inventories due at 1430 GMT
(Adds detail on Iraq, Algeria, updates prices)
By Stephen Eisenhammer
LONDON, May 10 Oil prices rose on Wednesday
after Iraq and Algeria joined Saudi Arabia in supporting an
extension to OPEC supply cuts and U.S. crude inventories fell
more than expected.
But the rise failed to recoup last week's losses with
concerns about rising output from the United States, Libya and
Nigeria continuing to weigh.
The industry group the American Petroleum Institute reported
a fall in U.S. crude inventories by 5.8 million barrels last
week, which was more than the 1.8 million-barrel slide analysts
Investors are now waiting to see if those numbers are
confirmed on Wednesday by official figures on weekly U.S. crude
and oil product inventories from the U.S. government's
Department of Energy, due out at 1430 GMT.
Global benchmark Brent crude was up 68 cents at
$49.41 a barrel by 1327 GMT. U.S. light crude oil was 69
cents higher at $46.57 a barrel.
"Oil prices are still finding it difficult to recoup the
losses they suffered last week," analysts at Commerzbank said in
a note, adding the impact on prices from the fall in U.S.
inventories had been underwhelming.
Also supporting prices were comments from Algeria's energy
minister on Wednesday that Algeria and Iraq favour extending
global supply cuts when OPEC meets later this month.
On Monday, Saudi Arabia's oil minister Khalid al-Falih said
he expected the output deal to be extended to the end of the
year or possibly longer.
State-owned Saudi Aramco will also reduce oil supplies to
Asian customers by about 7 million barrels in June, a source
told Reuters, as part of the Organization of the Petroleum
Exporting Countries' deal to reduce production.
Aramco had previously maintained supplies to important Asian
But questions remain about the effectiveness of OPEC-led
cuts, with OPEC member Libya saying production now exceeded
800,000 barrels per day (bpd) for the first time since 2014 and
could rise to 1.2 million bpd later this year.
Nigeria, which along with Libya is exempt from OPEC cuts, is
also expected to see a jump in output soon as Shell
tests the Trans Forcados oil export pipeline before it restarts.
Brent and U.S. light crude futures contracts closed on
Tuesday at their second lowest levels since Nov. 29, the day
before OPEC announced it would cut output in the first half of
Prices surged after that deal, but have come under pressure
in recent weeks as U.S. production has climbed, undermining
OPEC-led efforts to balance supply with demand.
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by
Edmund Blair and Louise Heavens)