* Russia says debating output cut beyond 2017 with others
* OPEC output cut extension likely, says Saudi energy minister
* Relentless rise in U.S. drilling saps market confidence
* Brent, WTI benchmark crudes remain below $50 a barrel (Updates with OPEC, adds comments, refreshes prices)
By Christopher Johnson and Karolin Schaps
LONDON, May 8 (Reuters) - Oil rose on Monday, reversing earlier losses, after sources said OPEC and its partners were considering extending their existing supply deal possibly into next year, which helped offset the bearish impact of more increases in U.S. crude output.
Brent crude was up 34 cents at $49.44 a barrel at 1410 GMT, having recovered from a session low of $48.65. U.S. light crude was up 35 cents at $46.57 a barrel, up from an intraday low of $45.83.
Industry sources and sources in OPEC said the group and its non-OPEC partners were considering an extension to the current deal, which comprises an output cut of 1.8 million barrels per day (bpd), for nine months or more.
The efforts of the Organization of the Petroleum Exporting Countries to reduce global oil inventories have been undermined by a surge in U.S. drilling, which has knocked more than 10 percent off the price of oil in the last month.
OPEC meets on May 25, when it is expected to discuss prolonging the cuts to the end of 2017, although analysts say a further extension may not be enough.
“The market is in a very dangerous condition,” said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates. “The trend is still down, but just correcting.”
Data from the InterContinental Exchange on Monday showed investors had cut their bullish bets on Brent to the lowest level since late November.
Russia said on Monday it was discussing prolonging cuts with other producers beyond 2017, without giving a clear timeline. Saudi Energy Minister Khalid al-Falih also talked of extending curbs beyond 2017.
Countering those efforts, U.S. drillers added oil rigs for a 16th week in a row last week, extending a drilling recovery into a 12th month, energy services firm Baker Hughes Inc said on Friday. RIG-OL-USA-BHI
Since a low point in May 2016, U.S. producers have added 387 oil rigs, or about 123 percent, Goldman Sachs said.
U.S. crude output averaged 9.3 million bpd in the week ended April 28, its highest since August 2015, according to federal data.
Many analysts now see U.S. crude output heading towards 10 million bpd over the next year or so.
“It’s all about inventories and U.S. shale versus OPEC,” said Hussein Sayed of brokerage FXTM. “OPEC members have no choice but to talk up prices by signalling an extension to the production cuts agreement.”
Additional reporting by Henning Gloystein in Singapore; Editing by Susan Thomas and Dale Hudson