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Oil prices slip on Chinese demand concerns, rising U.S. activity

15 August 2017

Oil prices steadied in early Asian trade on Tuesday after sharp falls the session before when a stronger United States dollar and a drop in Chinese refining runs hit the market.

In May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension.

Workers at Libya's Zueitina export terminal threatened to block a tanker due to dock on Saturday unless demands for salary and overtime payments are met.

Atkinson echoed other experts by reiterating the catch-22 facing the market when prices finally go begin to move upward: he said they will be "capped by the likelihood of more supply coming on stream from the U.S".

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"It is back to the Libyan situation being the most important thing here", said Bob Yawger, director of energy futures at Mizuho in NY.

Prices retraced all their losses, then see-sawed within a few cents of unchanged.

Crude oil prices have been holding in a range in the upper $40 and low $50 range for most of the year.

The price for Brent crude oil was down 0.6 percent at 9:20 a.m. EDT to $51.78 per barrel. An effort by the Organization of Petroleum Exporting Countries to drain the historic glut of oil on the market helped put a floor under the price of oil, but a resilient USA shale oil sector has put a limit on how high oil prices can go.

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Improved supply from Nigeria, Libya and shale drillers, have helped led the IEA projecting cuts by as much as 800,000 bpd required by the group this quarter to keep prices slightly above gloomy territory.

This contrasts with more bearish bets placed in the U.S. market, where investors cut net long U.S. crude positions last week, according to the U.S. Commodity Futures Trading Commission.

Oil production from the Permian Basin of West Texas and New Mexico is closely watched because its low costs and rapid growth have pressured efforts by oil cartel Opec to drain a global crude supply glut. The Opec member country is exempt from the global deal to cut output and has been trying to regain pre-war production levels.

The International Energy Agency (IEA) said on Friday that it expected 2017 oil demand growth of 1.5-million barrels a day, up from a previous expectation of 1.4-million barrels a day.

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Oil prices slip on Chinese demand concerns, rising U.S. activity