Oil prices fall on profit taking

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Global benchmark Brent crude futures fell 0.36 per cent to $52.53 per barrel, and U.S. benchmark West Texas Intermediate (WTI) prices were flat at the time of writing.

This was the fourth week-on-week decline in the country's oil rig count in eight weeks, and suggested a slowdown in United States drilling activity, contrasting with 23 successive weeks of additions since mid-January.

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So far, however, the increase in US production has been relentless with increasing volumes from shale, particularly from the giant Permian basin in Texas and New Mexico.

EconoTimes reports in its article Oil in Global Economy Series: US operating rigs decline for 4th time in 31 weeks that in May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension.

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Oil futures are lacking direction in Asian trade at the start of the week, after Friday's jump in prices. USA oil prices have been on the upswing since bottoming out near $43 a barrel in mid - June, though the market has not been able to sustain a rally above $50. The North American benchmark WTI is now trading at $48.5 per barrel and Brent at $4.1 per barrel premium to WTI. Rig numbers in the major oil-producing basins of Permian, Eagle Ford, Williston (which contains the Bakken shale play) and Niobrara remained stable from a week ago. In this case, the data is more neutral than it first appears, because the drop in rig numbers was concentrated in small basins aggregated under the "others" category by Baker Hughes and the Mississippian, which is a minor oilproducer.

Data from the U.S. Energy Information Administration showed last week that total domestic crude production edged up by 79,000 barrels a day to 9.5 million barrels, its highest level since July 2015. So far, this year, production has increased by 731,000 barrels per day.

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