Crude Oil Slinks Near USD52 Despite Demand Hopes

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U.S. output, almost 55% of which comes from its seven major shale plays, averaged 9.25 million b/d in the week ended April 14, up almost half a million barrels a day versus the end of 2016, and around 820,000 b/d higher than the recent trough of July 2016, according to the latest EIA data. The group agreed to let Iran pump an additional 90,000 barrels a day to reach output of about 3.8 million as the country recovers from sanctions.

The continued growth in US production and the rise in stockpiles forced the market to respond bearishly based on the increased inventory outlook.

OPEC and non-OPEC producers agreed in December 2016 to cut supplies for six months, helping lift oil prices to about $55 a barrel after a two-year slump.

Oil edged higher on April 19 as OPEC said it was committed to eroding a global surplus of crude, but increasing shale production in the US and still-high global stocks threatened to pull prices lower.

Benchmark Brent crude futures were down 56 cents at $55.33 at 0618 GMT (2:18 a.m. ET).

Saudi oil production in February was 10.011 million bpd, and that's the same figure the Saudis had reported to OPEC for their production that month.

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Oil dropped to the lowest in more than a week on signs United States output is rebounding, undermining OPEC's efforts to clear a global glut.

West Texas Intermediate Crude Oil has spent the better part of the past year oscillating near the $50-a-barrel level. OPEC exempted Nigeria and Libya from cutting production, due to their internal conflicts.

Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, fell by 570,000 barrels last week, according to a Bloomberg survey.

"Although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the United States, will soon be on the rise again", the IEA said in the report.

"There's renewed faith that OPEC and non-OPEC will be able to get global inventories lower", John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone.

Citigroup said OPEC output cuts will be able to offset the response of U.S. producers to higher prices. OPEC will decide at a meeting on May 25 whether to prolong the cuts it pledged to make starting in January, he said.

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