Oil prices slide on bulging United States crude inventories

While clashes among rival armed groups in the nation have previously led to market disruptions, news of the latest decline is driving a 0.7 per cent gain in NY oil futures after boosting them 1.3 per cent on Tuesday.

Meanwhile, market participants turn attention to Baker Hughes rig count, due to be released on Friday at 13:00 EDT. It has taken crude prices above $50/barrel, but they don't look comfortable there, especially as USA shale-oil production rises.

While U.S. crude inventories rose last week, they increased by less than they were expected to, signaling that more oil is being pulled out of storage.

Oil prices have surged due to weakened United States dollar and disruption of crude supplies from Libya.

U.S. inventories of oil rose by 1.5 million barrels to 520.2 million barrels in the week ended February 24, according to the Energy Information Administration's (EIA) weekly oil report.

Investors were waiting for data from the American Petroleum Institute (API) at 4:30 p.m. EDT on Tuesday and the U.S. Energy Information Administration (EIA) at 10:30 a.m. EDT on Wednesday.

Goldman Sachs on Sunday said an extension of the joint Opec and non-Opec oil production cut is not warranted unless supply and demand fundamentals deteriorate.

OPEC and several nonmember oil producers meeting in Kuwait say they have agreed to review whether an agreement to cut supplies should be extended by six months.

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"We believe that the rebalancing of the oil market is in fact making progress", it said, adding that an Opec-led extension of the production cut was therefore not needed.

Prices for front-month Brent crude futures, the global market benchmark, gained 55 cents to $51.30 per barrel by 1315 GMT (9:15 a.m. ET). The global benchmark crude traded at a premium of US$2.83 to May WTI.

Oil last week slid to the lowest since November as rising US.supply continued to counter production curbs by members of the Organization of Petroleum Exporting Countries and other nations.

But prices were still weighed on by a resurgence in USA oil production and the expectation that inventories there would build up once again, illustrating the persistent global supply overhang that has depressed prices for three years.

OPEC member Libya was excluded from the cuts, agreed late a year ago, as the country's oil sector suffered from the unrest that followed the toppling of Muammar Gaddafi in 2011.

In January, OPEC total production fell by 890,000 barrels a day, with most of the cuts coming from oil giant Saudi Arabia.

The latest Reuters survey also indicated that OPEC output had declined for the third successive month in March with overall compliance at 95%.

Concern that OPEC output cuts have driven a surge in production from rival USA drillers may prevent an extension of the caps - yet prices won't suffer much, according to the chief economist at Russia's state-owned Vnesheconombank.

  • Leroy Wright