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Oil above US$58 on US shale output report, Mideast
[LONDON] Crude oil rose on Tuesday after a forecast that US shale oil output would record its first monthly decline in more than four years and on tension in Yemen, where top oil exporter Saudi Arabia is embroiled in a civil war.
Brent crude for May was up 50 cents at US$58.43 a barrel by 0815 GMT, while US crude was up 60 cents at US$52.51.
The US Energy Information Administration (EIA) said on Monday it expected US shale production to fall by 45,000 barrels per day (bpd) to 4.98 million bpd in May.
Shale production has helped boost US oil output by more than 4 million bpd since 2010 and has been a key factor behind the collapse in world oil prices over the last year.
But much lower oil prices, down from above US$115 a barrel last June, have now begun to hit exploration.
"It's a small change, just a drop in the ocean, but an excuse to buy," said Carsten Fritsch, analyst at Commerzbank. "A lot of speculative financial investors think oil is cheap and are looking for a reason to get into the market."
Oil also found support from tension in the Middle East, where fighting is continuing in Syria, Iraq and Yemen.
Yemen's liquefied natural gas (LNG) plant said on Tuesday it declared force majeure due to deteriorating security and halted all production.
Yemen is a small oil producer, pumping only around 130,000 bpd of crude in recent months, but analysts fear its civil war could destabilise its northern neighbour, Saudi Arabia.
"Geopolitical risk in oil markets remains elevated," JP Morgan analysts said in a note. "From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise."
In Asia, China exported 750,000 tonnes of crude oil in March, its largest volume since 2006, in a possible sign the world's second largest crude importer is running out of storage capacity.
Analysts also said that China's demand growth would likely slow further.
"With China's Q1 GDP figures about to be released tomorrow, we see very little upside even if prices move up today," Singapore-based brokerage Phillip Futures said.
China's economy is growing at its slowest pace in 25 years and its export sales contracted 15 per cent in March, deepening concern over Chinese economic growth.