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Oil down slightly in subdued trade after failed North Korean missile test

26 April 2017

"With questions hanging over US gasoline demand, any further product builds will act as a brake on the oil price recovery".

US government drilling data showed shale production next month was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest USA shale region, expected to reach a record 2.36 million bpd.

Benchmark Brent crude futures ended the session 53 cents lower at $55.36 while U.S. West Texas Intermediate (WTI) crude futures settled down 53 cents at US$52.65 a barrel.

Crude oil fell in quiet trading on Monday, after the three-day Easter break, on signs the United States is continuing to add output, undermining OPEC efforts to support prices, and as the market digested North Korea's failed missile launch on Sunday.

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"We are still in a very well-supplied crude market in the U.S. The gasoline build was a bit of a surprise but makes sense given that this is the time of year refinery runs increase", Wellington, Florida-based Energy Analytics Group LLC director, Thomas Finlon, told Bloomberg by telephone. The global benchmark crude traded at a $2.27 premium to June WTI.

OPEC agreed to cut output by 1.2 million barrels a day for the first six months of 2017, while 11 other non-OPEC countries including Russian Federation agreed to limit supply.

Brent futures were up 15 cents to $53.08 a barrel were at 11:40 a.m. EDT (1540 GMT).

The US drill rig count climbed to 683 last week, the highest since April 2015 and a 13th week of gains, Baker Hughes data showed on Friday.

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"The U.S. has now entered a seasonal period in which stockpiles are reduced during the summer driving season, hence the unexpected miss weighed heavily on prices", James Wood, investment analyst with Rivkin Securities, said in a note.

The Organization of the Petroleum Exporting Countries will meet on May 25 to consider extending output cuts beyond June to reduce a glut that has depressed prices.

Arabiya TV quoted Saudi Energy Minister Khalid al-Falih as saying on April 17 that the level of compliance among OPEC and non-OPEC oil producers with a global deal to cut output is very good.

US crude prices were down more than 1 percent at $52.32 a barrel in post-settlement trade after the American Petroleum Institute released its weekly data, indicating that crude stockpiles declined less than analysts had forecast.

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Saudi oil production in February was 10.011 million bpd, and that's the same figure the Saudis had reported to OPEC for their production that month. Total volume traded was about 16 per cent below the 100-day average.