Oil drops below $45 for first time since OPEC deal

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West Texas Intermediate, the USA benchmark for the price of oil, was down 1.8 percent to $46.97 per barrel.

"So far Opec's strategy to draw down inventories has not worked".

Late last year, the Organization of the Petroleum Exporting Countries (OPEC), together with other key producers such as Russian Federation and Oman, announced that they would cut oil output for the first six months of this year to reduce a vast global overhang of unused crude.

U.S. West Texas Intermediate crude fell $1.18, or 2.4 percent, to $47.66 a barrel, its lowest close since March 21.

Other analysts agreed the steep price falls would likely force Opec members to extend production cuts later this month, but they said the prospect of deeper cuts appeared slim.

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Concerns over demand led to a broad drop in commodities Thursday, as metal prices also fell on lackluster economic data from China, a major commodities consumer. "On the other hand, one can only ponder how long they are willing to shoulder the burden of supporting oil prices on their own", PVM Oil Associates analyst Tamas Varga said.

"A lot of global players didn't expect USA production to be able to ramp up this quickly, at this price level", said Jenna Delaney, senior oil analyst at Platts Analytics.

Both benchmarks tested major support levels, with USA crude falling well below the key price of US$47.23, according to traders and analysts.

The Reserve Bank of India, which is largely expected to keep interest rate unchanged for quite some time, had earlier flagged inflation risks from rising crude oil prices. "You can't say you want lower inventories, and after a few months give up".

"Persistent growth in United States oil production. will also make extensions of the Opec cap beyond 2017 unlikely".

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"EIA data showed US stockpiles fell only 930,000 barrels to 527.8 million barrels", ANZ said in a research note. Meanwhile, American production has roared back, growing by 523,000 barrels a day this year to the highest level in nearly two years as investment returns, according to the Energy Information Administration.

Officials from the 13-country OPEC - which accounts for a third of global oil production - are in Vienna on Thursday and Friday to attend a meeting of the group's governing board.

"He added that this balances out booming USA shale production, with the resulting forecast being "$50-$55 solid for the rest of the year.I think we're well situated".

The Organization of the Petroleum Exporting Countries and participating non-OPEC countries meet on May 25 to discuss whether to extend the coordinated curbs in production into the second half of the year.

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