Oil steadies as OPEC boost offsets dent from U.S. supply

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"The battle between the "sheiks and the shale oil producers" is far from decided. with all attempts by OPEC to achieve a lasting production deficit on the oil market being torpedoed by non-OPEC producers - first and foremost the USA", analysts at Commerzbank wrote.

USA crude futures tumbled following the EIA data release, off $2.7% to $51 a barrel. The industry body American Petroleum Institute had reported an increase of 2.254 million barrels in gasoline inventories on Tuesday, setting the stage for crude's slide.

Hedge funds boosted bets on higher West Texas Intermediate crude prices a second week as futures topped $53 a barrel for the first time in a month, US Commodity Futures Trading Commission data show.

Currently, OPEC, the average daily production of which by the results of the first quarter amounted to 32.02 million barrels per day, actually balances supply and demand.

Oil-producing nations are moving closer toward ending a global glut and re-balancing the crude market, and Opec will decide next month whether to extend its cuts in output beyond June, the group's Secretary-General Mohammad Barkindo said. Its production, however, rose to 10 million BPD in February, up from 9.75 million BPD in January, as domestic refiners processed more oil. On Thursday, before major markets closed for the holiday break, they settled up 3 cents at $55.89 a barrel.

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"There's been a lot of attention paid to OPEC production cuts, while nearly nobody has focused on the gains elsewhere", Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone.

U.S. crude futures settled down $US1.97 to $US50.44 a barrel, a 3.8 per cent drop, the worst-one day decline since March 8, as investors bailed out of long positions in response to the bearish inventory figures.

Then in December, non-OPEC producers led by Russian Federation agreed to cut their own output to 558,000 barrels per day.

Any increase in output in the United States, now the world's third-biggest oil producer, was likely to put pressure on oil cartel Opec - which agreed to curb output at the end of 2016 - to cut production further.

A deal by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members to reduce oil production "surprisingly" appears to be holding, Justin Urquhart Stewart, director at Seven Investment Management in London, told New Europe on April 18.

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