Supply Concerns Continue To Hit Crude Oil Prices, Inventories Back In Focus

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USA shale production can expand with prices in the mid-$40s, according to JPMorgan Chase & Co. Crude stockpiles at Cushing, Oklahoma, the delivery point for WTI and the biggest USA oil-storage hub, probably dropped by 1.4 million barrels last week, according to a forecast compiled by Bloomberg.

Crude prices are stuck around 18 per cent below their starting point for 2017.

Benchmark Brent crude was down 10 cents at $46.78 a barrel by 0820 GMT.

Persistent concerns about the effectiveness of an arrangement by OPEC and other producers to balance the market left oil prices bruised in early Monday trading.

"It's not going to be easy just to say "Maybe we should just bring Nigeria and Libya into the line and it will be fine", Ait-Laoussine said by phone.

After cutting positions that would profit from higher prices to a nine-month low by late June, data shows money managers have started raising their long positions again since the start of July, indicating that many believe prices have bottomed out.

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USA crude futures CLc1 settled up 17 cents or 0.4% to $44.40 a barrel, while Brent crude futures LCOc1 also rose 17 cents or 0.36% to $46.88 a barrel.

"There has been some talk about Nigeria and Libya having to fall in line with the rest of Opec members, but right now those counties want to take care of their own needs first", said David Madden, market analyst at CMC Markets.

Oil prices remained steady as at May 24 at the global market trading above 50 dollars per barrel, as the traders await formal declaration of the production cut extension.

A report by Barron states that reducing supply of oil from Organization of Petroleum Exporting Countries (OPEC) could raise the price of oil by about US$60 per barrel.

With deeper cuts now not on the agenda, according to OPEC Secretary-General Mohammad Barkindo, the group is exploring other ways the agreement could be adjusted. However, a big part of that effort was undone by the resurgence of Libya and Nigeria, OPEC members exempt from the cuts that together have added 440,000 barrels a day of production in the last two months.

The ministerial talks would be preceded by a meeting of a technical committee involving all OPEC and non-OPEC members now participating in the oil output-cutting deal. Producers have reportedly begun to consider asking the two nations to limit their output.