Oil dips as record US crude stocks outweigh falling Libya output

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On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.60% at $48.65 a barrel.

Record high USA stocks have led speculators to cut holdings of U.S. crude oil futures and options to the lowest since December.

The OPEC agreement was backed by 11 non-OPEC states, including Azerbaijan, which had joined the deal by promising to reduce oil output by 558,000 barrels per day.

Michael Hewson, chief market analyst at CMC Markets UK, said the loss of Libyan output due to geopolitical concerns along with a decline in Iraqi output in line with Opec production caps had "helped underpin prices in the short term". A joint OPEC and non-OPEC ministerial monitoring committee has been asked to make a recommendation next month on the fate of the cuts beyond their June expiration, after taking into account compliance, demand, supply and stocks data submitted to it by the OPEC secretariat and a Joint Technical Committee comprising representatives from the members of the monitoring committee. Oil companies are reviving investment after a two-year rout, easing but not eliminating the risk of a future supply crunch, the International Energy Agency said earlier this month.

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Prices for front-month Brent crude futures LCOc1 , the Global benchmark for oil, were at $52.53 per barrel at 0445 GMT, up 11 cents from their last close.

Van Dulken and Croft said gold's retracement from Monday's March highs had extended overnight as the USA dollar rebound from 4-month lows continues.

"With the average daily volume of crude imports more than 12 times the average daily volume of crude exports, many tankers were available for "back-haul" voyages at rates significantly below regular tanker rates, likely further reducing the cost of reaching export markets", the EIA said. Prices are down 7.1% this month, the biggest slide since July.

Brent futures were down 53 cents at $52.43 a barrel (bbl) at 5:23 a.m. CT (10:23 GMT). The contract gained $1.14 to $49.51 on Wednesday.

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Brent crude futures (LCOc1) have made the biggest losses across global asset classes this quarter. The supply curbs are gradually restoring the market to balance, the group's Secretary-General Mohammad Barkindo said in a statement this week.

"The possibility of a deal extension is high, but the issue must be thoroughly discussed first", Zanganeh said. Non-OPEC producers agreed to cut about half that amount.

Speaking at the FT Commodities Global Summit in Lausanne, Switzerland, Daniel Jaeggi, president of Mercuria Energy Group Ltd., said current project spending is focused on "short-cycle" USA shale deposit projects, and that "we are sowing the seeds for potential instability in the future and more volatility: you won't be able to satisfy demand with short-cycle barrels".

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