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Crude prices edge up on Kuwait oil worker strike
[SINGAPORE] Oil prices edged up in early trading on Tuesday as an oil worker strike in Kuwait cut huge amounts of crude out of the supply chain.
But analysts warned that the disruption would be short-lived and that markets would soon refocus on a global supply glut following the failure on Sunday by major exporters to rein in on oversupply.
A strike in Kuwait by oil workers has cut the country's production to just 1.1 million barrels per day (bpd), down from 2.8 million bpd usually.
Brent crude futures were at US$42.95 a barrel at 0027 GMT, 4 US cents above their last close.
US West Texas Intermediate (WTI) futures were up 15 US cents at US$39.93 a barrel.
Kuwaiti officials said they would be able to increase output despite the open-ended strike, by using crude from inventory stocks and by taking legal action against unions.
Analysts said the government would also likely compromise with the strikers to get exports up and running again. "Sensitive to union pressure, the government is likely to compromise on most of striking oil workers' pay demands," policy risk consultancy Eurasia Group said.
"In the coming days oil production is likely to partially recover from its initial drop as non-striking staff is redistributed and inventories drawn upon, avoiding a force majeure on loadings," it added.
Once Kuwait's exports have fully resumed, traders said the market would again focus on a global glut that sees 1 to 2 million barrels of crude pumped every day in excess of demand after producers failed to agree on output targets during a weekend meeting in Qatar's capital, Doha.