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Oil bounces off Nov lows, but bloated US stockpiles pressure market

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SINGAPORE: Oil prices recovered on Thursday from losses chalked up the session before, but the market remained under pressure as bloated US crude inventories and rising output dampen OPEC-led efforts to curb global production.


Brent crude futures, the international benchmark for oil, were at $50.82 per barrel at 0807 GMT, up 18 cents, or 0.4 per cent, from their last close. That came after Brent briefly dipped below $50 a barrel on Wednesday for the first time since November.


US West Texas Intermediate (WTI) crude futures were up 19 cents, or 0.4 per cent, at $48.23 a barrel, after testing support at $47 overnight.


Analysts said Brent had found technical support around $50 a barrel and was being pushed up as traders took new long positions after falling to multi-month lows overnight.


Despite the bounce, traders said the market remained under pressure, largely due to record US crude inventories and doubts that an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut output was reining in a global fuel supply overhang.


Greg McKenna, chief market strategist at futures brokerage AxiTrader, said OPEC was “underwriting the investment plans and returns of their competition in US shale oil.” McKenna said there was a risk of oil prices dropping further due to US output and a lack of compliance by some producers who said they would cut output. Oil prices could rise to $60 per barrel in the second quarter, assuming inventory draws and oil producer output cuts remain in place, Barclays said in a report on Thursday. — Reuters


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