The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russian Federation, known as OPEC+, are expected to at least extend existing output cuts to June 2020 when they meet this week.
Brent crude oil hovered around $61 per barrel on Wednesday afternoon. West Texas Intermediate (WTI) futures rose 91 cents, or 1.7%, to $56.08 a barrel, having risen by more than $1 earlier.
The global oil supply demand balance requires an extension of the current OPEC+ cuts given the large increase in output from non-OPEC projects and an uncertain demand growth outlook, the bank said.
"If the group extends the current plans without making deeper cuts, prices are likely to retreat to near $50 a barrel".
On Friday, WTI futures settled 5.1% lower while Brent plunged 4.4% on concerns that talks to end the trade war between the United States and China, the world's two biggest oil users, would be disrupted by US support for protesters in Hong Kong.
Saudi Arabia would, at one time, have liked to do something immediately to lift the price of crude and boost the initial public offering of shares in the country's national oil company, Saudi Aramco. The nation's output fell to the lowest in more than a decade.
"If they just keep the existing situation, there will be a massive oversupply", said Jacques Rousseau, managing director of Clearview Energy Partners.
He and other non-Opec producers will meet with their Opec counterparts (a combination known as Opec+) later in the week to discuss their ongoing agreement of jointly curbing production by 1.2 million barrels per day (Mmbpd) until March, Kallanish Energy notes. However, some OPEC members may find it hard to make significant cuts on their own terms.
Oil gained as the US and China were moving closer to a trade deal and before OPEC+ decides on its output-cut policy later this week.
Concerns about the inability of the United States and China, the world's two biggest oil users, to reach a preliminary deal to resolve their 17-month trade dispute also weighed on oil prices, along with discouraging USA economic data.
In the meantime, Russia, which is not part of OPEC but has continued to expand its lead in production limits in recent years, has announced that it wishes to recalculate oil production in line with OPEC countries. That could enable it to produce more oil. The article said, "Saudi Arabia will no longer compensate for other members non-compliance". "And I think the Saudis know that".