Oil Slips As Higher US Output Looms Despite Dip In Drilling

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The reduction came as gross short positions on the New York Mercantile Exchange climbed to their highest level in almost a month.

Brent for May settlement fell 38c to $65.11 a barrel on the London-based ICE Futures Europe exchange.

USA stocks, though, were little changed on Monday, with the S&P 500 .SPX up 0.1 points, or 0.00 percent, to 2,786.67.

Then, 617 rigs were active, and most analysts expect U.S. crude oil production, which has already risen by more than a fifth since mid-2016, to 10.37-million barrels a day to expand further.

Meanwhile in Libya, the Marsa el-Brega refinery was hit by an explosion and fire Saturday following a gas leak at its methanol plant, state-owned National Oil Corp. said.

Williams also pointed out that based on the figures, USA shale plays this year will "add enough to US production to match all the oil Venezuela now produces".

FILE PHOTO - A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. "That figure was close to in line with the February average weekly increase of 91,000 [barrels a day] and is still more than four times greater than the pace of production growth in 2017", said Tyler Richey, co-editor of the Sevens Report. "But they may say we can't have these high prices and scale back the cuts".

That has undercut some of the enthusiasm for oil, as investors weigh increased USA supply against the likelihood that the Organization of the Petroleum Exporting Countries and non-OPEC producers will maintain supply cuts that have been in effect for more than a year. That split is driven by differing views over whether $70 a barrel sends USA shale companies into a production frenzy that could cause prices to crash.

OPEC's oil production cut agreement could start falling apart soon, as Saudi Arabia and Iran once again face off. At stake is OPEC's production limits, which are among factors helping the oil market's monthslong recovery.

"A falling rig count and the strong employment data may have helped support prices", said William O'Loughlin, investment analyst at Rivkin Securities. The U.S. benchmark gained $1.92 to $62.04 on Friday.

In other trading, April gasoline fell 0.5% to $1.894 a gallon, while April heating oil fell 1.2% to $1.865 a gallon.

For the record, the Islamic republic is allowed to pump up to 3.8 million barrels per day (bpd) under the cutback deal, and Zanganeh said his country could produce about 100,000 bpd more.

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