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Oil trades below US$50 after US supply glut erases Opec's gains

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WTI traded below US$50 a barrel after surging US supplies wiped out gains in the last 3 months since the Organization of Petroleum Exporting Countries' (Opec) decision to cut output.

[HONG KONG] WTI traded below US$50 a barrel after surging US supplies wiped out gains in the last 3 months since the Organization of Petroleum Exporting Countries' (Opec) decision to cut output.

Futures recovered 0.8 per cent in New York, paring a slump of 7.6 per cent in the past four sessions that pushed prices to the lowest since Nov 29, the day before Opec agreed to trim supplies. US stockpiles have expanded to a record for four straight weeks and output has surged to the highest level in more than a year, government data showed Wednesday.

Oil had fluctuated above US$50 a barrel since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply for six months starting Jan 1. 

Saudi Arabia's Oil Minister Khalid Al Falih said this week global inventories are falling slower than expected, opening the door to extending an output-cut deal.

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Market voices on:

"The oil market had grown complacent to downside risks following a period of low volatility supported by Opec output cuts," said Jens Pedersen, senior analyst at Danske Bank A/S in Copenhagen.

West Texas Intermediate for April delivery gained 47 US cents to US$49.75 a barrel on the New York Mercantile Exchange at 9.38am in London. Total volume traded was in line with the 100-day average. The contract lost US$1 to US$49.28 on Thursday, the lowest close since Nov 29. Prices are set for the biggest weekly loss since Nov 4.

Brent for May settlement was 40 US cents higher at US$52.59 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 92 US cents, or 1.7 per cent, to US$52.19 on Thursday, the lowest close since Nov 30. The global benchmark crude traded at a premium of US$2.30 to May WTI.

US crude inventories rose by 8.2 million barrels last week to 528.4 million, the highest level in weekly data compiled by the Energy Information Administration since 1982. Output advanced for a third week to 9.09 million barrels a day, the most since February 2016.

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