Oil Slides on concerns over US Output

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It showed that hedge funds decreased their net long positions in US WTI (West Texas Intermediate) crude oil contracts by 86,784 contracts to 288,774 contracts in the week ending March 14, 2017-compared to the previous week.

Crude traded in a narrow band this week, with Brent and West Texas Intermediate bouncing in a $US2.50 range as investors weighed the impact of the first oil cut from the Organization of the Petroleum Exporting Countries in eight years against rising US shale oil output and high inventories.

Brent crude was down 29 cents per barrel on Monday, easing 0.56 percent to trade at $51.47 per barrel.

Instead of rebounding to $US53 a barrel, USA crude has remained stuck around $US49.

The Organization of the Petroleum Exporting Countries (OPEC), together with other producers including Russian Federation, has pledged to cut its output by nearly 1.8 million barrels per day (bpd) between January and June in an effort to prop up prices and rein in a global supply glut that has dogged markets for nearly three years. And the potential for increased USA production continues to build with Baker Hughes reporting a 14 drilling rig increase last week. Shale production is also expected to reach a six-month high in April.

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Falling oil prices and fears of rising protectionism following the G20 world financial leaders meeting put a dampener on global markets after last week's record highs in the United Kingdom and US.

The bias is still to the downside with potentially bullish comments from Saudi Arabia Minister Khalid al-Falih failing to move prices higher with his talk of a possible extension of the plan to cut output.

Oil prices have edged lower by more than one per cent today while a new report suggests Opec's production cuts are unlikely to bump prices above $60 a barrel this year. Its crude output declined to 9.75 million barrels a day, the lowest since February 2015, the data showed.

Traders also said that healthy oil demand would help rebalance markets and support prices.

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