Oil prices have remained largely unchanged as rising United States production continues to offset OPEC's output cut initiative.
Citigroup Inc. says output cuts by the Organization of Petroleum Exporting Countries will be able to offset the response from American producers to higher prices.
This is the third consecutive week the oil companies are hiking their prices.
"While US inventories are going to decline, they are falling from a much higher level than they have over the past two years".More news: Champions League: Monaco and Juventus advance to semi-finals
The bank expects U.S. West Texas Intermediate oil to average $62 a barrel and global benchmark Brent crude to average $65 a barrel in the fourth quarter. Production fell 0.5% month-over-month and 0.2% YoY (year-over-year).
U.S. WTI futures fell 24 cents, settling at $52.41 a barrel.
Benchmark Brent crude futures were down 50 cents at $55.39.
Crude oil prices slipped on Monday in subdued trading after a three-week rally capped by the long Easter holiday weekend, but losses were curbed by strong economic growth in China and a weaker dollar.More news: Barcelona lose appeal to play Neymar in El Clasico
Although the failure of a ballistic missile launch in North Korea brought some respite, markets were braced for further tensions in the region.
"U.S. drillers are recovering output faster than the market predicted and it's getting faster every day", Will Yun, a commodities analyst Hyundai Futures Corp., said by phone in Seoul.
While Iran fuelled hopes that OPEC and non-OPEC oil producers could extend their output cuts beyond the six-month agreement, Saudi energy minister Khalid al-Falih said it was too early to discuss an extension. The U.S. oil-rig count has been on the rise 13 weeks and now stands at its highest level in two years, according to oil-field services firm Baker Hughes Inc.
Further weighing on prices was the EIA's Drilling Productivity Report from Monday, which showed that USA oil production is expected to increase by 124,000 bpd in May over April-the largest monthly increase since February 2015. Consequently, the country lost its status as Africa's top oil producer to Angola, according to latest data from the Organisation of Petroleum Exporting Countries (OPEC).More news: China urges U.S. and North Korea to refrain from provoking each other
The recovery in USA drilling activity is damping optimism that had sent prices above $53 a barrel after some members of the Organization of Petroleum Exporting Countries voiced support for prolonging production cuts with other nations beyond June.
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