Oil stable on falling Libyan output, but bloated USA market still weighs

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Crude futures were trading flat to lower early Thursday in Asia, as profit-taking crept in following the biggest single-day gains notched in almost two months in Wednesday's session, a relief rally spurred by a lower than expected weekly build in USA crude stocks, and a continued drop in refined product inventories.

Eastern Time. The report comes after American Petroleum Institute late Tuesday reported a rise of 1.9 million barrels in US crude supplies for the week ended March 24, but a draw of 580,000 barrels at the oil storage hub in Cushing, Okla., according to media reports.

Still, resurgent USA oil production and record domestic crude inventories have kept pressuring oil prices.

Crude oil for May delivery rose 29 cents, or 0.6%, to $48.66, while Brent gained 36 cents, or 0.7%, to $51.69 a barrel.

The higher prices came despite USA crude stocks rising by 1.9 million barrels to 535.5 million barrels.

Other oil exporters outside OPEC, including Russian Federation, have also promised to cut production but so far those reductions have been limited.

Brent for May settlement, which expires Friday, rose 54 cents, or 1 per cent, to $US52.96 a barrel on the London-based ICE Futures Europe exchange.

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Yet more impetus for market players was provided by Libya, whose crude production dropped to a six month low of 500,000 bpd due to the shutdown of a pipeline that links the oil field of Sharara in the southwest part of the country to the Zawiya terminal.

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

Oil prices closed at a three-week high on Wednesday, boosted by signs of strong demand for crude products and renewed commitments by major oil producers to rein in production.

Late in the trading day, the American Petroleum Institute will publish data on US crude oil inventory levels for last week. Crude-oil stockpiles rose a less-than-expected 900,000 barrels last week by the government's count.

As markets remain bloated halfway into the cuts, there is a broad expectation that the supply reductions will be prolonged into the second half. But that doesn't mean less production because new rigs are much-more efficient as they can drill more oil in less time.

Some nations listed as receiving crude oil exports from the United States in EIA export statistics, such as the Marshall Islands, Bahamas, Panama, and Liberia, are unlikely to be actual final destinations.

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