Crude oil prices claw back losses, but record USA output weighs

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Sorokin, a former oil and gas analyst at Morgan Stanley, said USA shale oil output, the key driver behind the stellar growth in the country's oil production, will increase by 1.3-1.4 million bpd this year, lower than some estimates.

U.S. West Texas Intermediate (WTI) crude futures fell $1.23 a barrel to settle at $65.81 a barrel. For the week, WTI was on track for a almost 2.2 percent fall, adding to last week's near 5 percent decline. It was still set to rise 0.5% for the week.

This steady climb in United States production weighed on NYMEX prices, while OPEC supply concerns pushed Brent prices higher, resulting in the front-month ICE Brent/NYMEX spread crossing $11/b during Thursday's trading session - its widest level since March 2015. Meanwhile, the EIA report showed a surprise decline of 3.62 MMbbl in nationwide inventories, while stockpiles at the key storage and pipeline hub at Cushing, Okla., fell by 556,000 bbl.

“The report was supportive due to the large drop in crude oil inventories which was a function of a trifecta of bullish elements: strong demand from refiners, a sizeable drop in crude oil imports, and rebound in exports, ” said John Kilduff, a partner at Again Capital LLC in NY.

At 434.5 million barrels, USA crude oil inventories are in the lower half of the average range for this time of year, according to EIA.

Crude production continued to set a weekly record high, edging up to 10.8 million bpd, though the weekly USA figures are subject to revisions; monthly data for March will be released later on Thursday. In March it jumped 215,000 bpd to 10.47 million bpd, a new monthly record, the Energy Information Administration (EIA) said on Thursday.

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"The weekly number suggests USA production is really strong and continuing to rip higher", said Matt Smith, director of commodity research at ClipperData. But without adequate transportation to get crude to the coasts, "we're going to continue to see some weakness in WTI", he said.

The Iranian light crude price settled at $77.03 per barrel in the mentioned week, Shana reported on Saturday.

At 434.5 million barrels, US crude oil inventories are in the lower half of the average range for this time of year.

Speculators in Brent crude cut their net long positions in the week by 49,638 contracts to 451,966.

Opec and non-Opec producers have committed to cut output by 1.8-million barrels a day until the end of 2018, but are ready to make gradual supply adjustments to deal with shortages, a Gulf source familiar with Saudi thinking told Reuters late on Wednesday.

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