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Oil edges up, Brent below $50 a barrel ahead of Opec meeting

Reuters/Singapore 21 Jul 17 | 04:03 PM

Oil prices edged up on Friday ahead of a key meeting of major oil producing nations next week, but Brent held below the $50 per barrel level that was briefly breached for the first time in six weeks in the previous session.

International benchmark Brent crude futures were up 10 cents, or 0.2 per cent, at $49.40 per barrel at 0658 GMT.

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US West Texas Intermediate (WTI) crude futures were up 7 cents, or 0.2 per cent at $46.99 per barrel.

Both benchmarks hit their highest levels since early June in choppy trading the previous trading session, having been pushed higher by data showing US crude and fuel inventories fell sharply last week.

"The impact of strong drawdown in inventories announced earlier this week was still lingering in the market," ANZ bank said.

Ric Spooner, chief market analyst at CMC Markets in Sydney, said the decline in inventories could continue in the near term, although overall stock levels this year would likely be higher than in 2016.

US oil stocks, at roughly 490 million barrels, remain well above the five-year average, while US production has increased almost 12 per cent since mid-2016 to 9.4 million bpd.

An abundance of global crude supplies has put pressure on oil prices and key members of the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet non-members in St Petersburg, Russia, on Monday to discuss market conditions and whether more action is needed to support prices.

"Market participants seem to be convinced that the supply glut is here to stay and that the market is unlikely to rebalance anytime soon," said Sukrit Vijayakar, director of energy consultancy Trifecta.

OPEC, together with some non-members like Russia, has pledged to reduce the global glut by cutting production by 1.8 million barrels per day (bpd) between January this year and March 2018.

US investment bank Jefferies said "actions from the next OPEC/non-OPEC working committee meeting seem unlikely," although it added that "if OPEC is to achieve its objective of bringing OECD inventories back to normal levels it will need to take further steps."

Traders have been watching reports that the world's top crude producer Saudi Arabia is working to draw down bloated stocks, particularly as other OPEC members - including Iraq and Libya - are raising output.

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