Price Of Crude Oil Dips On Supply Glut Concerns

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Price Of Crude Oil Dips On Supply Glut Concerns

Brent, the global benchmark, gained 26 cents, or 0.5%, to $53.19 a barrel on ICE Futures Europe.

Iran was allowed to increase its output under the deal as the nation rebuilds from worldwide sanctions that pressured its energy industry.

As Saudi Arabia is overcomplying with the OPEC production cuts and showing fellow OPEC members a "lead by example", the Kingdom cut its crude oil exports in February to the lowest level since May 2015, while Saudi refineries processed record amounts of supply for domestic use.

Patrick Pouyanne, the chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year due to a rapid increase in US shale production.

US crude oil production rose to 9.25 million barrels per day, official data showed, up nearly 10 percent since mid-2016. The May contract expires at settlement, and the more actively traded June contract recently gained 10 cents, or 0.2%, to $50.95 a barrel.

But U.S. stockpiles and production have cast doubt on whether the OPEC cuts were enough.

On Wednesday, crude prices tumbled more than 3.5 percent as US government data showed domestic crude stocks fell less than expected in the latest week and gasoline stocks posted a surprising 1.5-million-barrel build.

"A build to gasoline inventories is tilted a little bearish, although a build of 2.5 million barrels on the Gulf Coast was in response to higher refining activity", said Matt Smith, director of commodity research at ClipperData.

Still, Saudi energy minister Khalid al-Falih on Thursday said a preliminary agreement to continue cuts for another three or six months is within reach and could be approved at OPEC's next meeting on May 25.

OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, to cut oil output was likely to be extended beyond June. 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.

"Five of the last trading days we've been lower", he said.

Slight production reported Wednesday also reinforced widespread anxiety that USA shale producers are becoming more capable in churning out oil at a lower price, analysts say.

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