Crude Oil Prices Recover From Sharp Losses, Supply Concerns Persist

Benchmark Brent crude futures were down 18 cents 55.71 at 0047 GMT.

Now the deal's participants must weigh whether another such agreement is worth it, given that any price increases would spur more US production.

"As long we do not get any negative surprises in terms of demand, the price is likely to settle back into its recent range with the upside still capped", Ole Hansen, the head of commodity strategy at SaxoBank, said in a semi-regular newsletter. Increasing U.S. output is undermining attempts by OPEC and other major oil producers to curb output and sustain higher prices on oil market.

OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, to cut oil output was likely to be extended beyond June.

Oil prices may rise by 20 percent this year as energy producers outside the US keep a lid on how much crude they pump, said analysts at Citigroup.

Oil dropped to a two-week low after a report showed US gasoline supplies gained for the first time in nine weeks as crude output rose.

Shale production in May was set for its biggest monthly increase in more than two years, according to the U.S. Energy Information Administration, as producers boosted drilling activity.

The bank expects US West Texas Intermediate (WTI) crude to reach $62 a barrel and Brent crude to average $65 per barrel by year-end.

US crude production rose to 9.252 million barrels per day from 9.235 million barrels in the week prior, continuing a strong rebound, according to EIA.

Saudi Arabia has undertaken the largest cut in oil output (486,000 barrels per day) among the participants of the OPEC deal signed previous year in Vienna.

WTI rose 4.6 per cent to $53.40 a barrel in the report week, and traded 0.9 percent lower at $52.73 as of 12:55 p.m.in Hong Kong on Monday.

In Libya, fighting between rival factions has cut oil output, but state oil company NOC was able to reopen at least one field and was pushing to reopen another.

The anonymous sources said that Saudi Arabia, Iraq, and Kuwait would support an extension of the cartel's existing 1.2-million-barrel per day production cut during the summit in Vienna next month.

Oil prices were little changed on Thursday in a seesaw trading session, as investors weighed rising USA production against comments from leading Gulf oil producers that an extension to OPEC-led supply cuts was likely.

  • Jacqueline Ellis