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Oil markets remain cautious on record supplies

Published 2017-04-20, 09:15 p/m
© Reuters.  Oil markets remain cautious on record supplies
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* Record amounts of crude are on ships to customers

* Murky inventory picture leaves market grappling for clarity

* Oil supplies and crude price curve: http://tmsnrt.rs/2pElIP6

By Henning Gloystein

SINGAPORE, April 21 (Reuters) - Oil opened the last day of a choppy trading week on a cautious note over doubts that an OPEC-led production cut was having the desired effect of restoring balance to a market that has been dogged by oversupply for more than two years.

Brent crude futures LCOc1 were at $53.07 per barrel at 0113 GMT, up 8 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 had risen 8 cents to $50.79 a barrel.

The stable prices came after a more-than-3.5 percent fall in both benchmarks earlier this week as doubts emerged over the effect of an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by almost 1.8 million barrels per day (bpd) during the first half of the year.

Thomson Reuters Eikon data shows that a record 48 million bpd of crude is being shipped across ocean waters in April, up 5.8 percent since December, before cuts were implemented.

The market is taking note: The value of the entire Brent forward curve 0#LCO: has slumped steadily since the start of the OPEC-led cuts in January. The average monthly value of a 24-month Brent curve is down by more than $4 per barrel since January to around $54.15 a barrel.

The high supplies are in part a result of other producers, who haven't agreed to cut output, increasing their exports.

"The resurgence of U.S shale continues to sabotage the cartel's efforts to stabilise the saturated markets," said Lukman Otunuga, analyst at futures brokerage FXTM.

U.S. production is soaring, jumping by almost 10 percent since mid-2016 to 9.25 million bpd C-OUT-T-EIA . This brings its output close to the world's top two producers, Saudi Arabia and Russia.

Attempting to prevent a further ballooning in supplies, some OPEC producers including de-facto leader Saudi Arabia are lobbying to extend the pledge to cut production beyond June. determine the health of oil markets, analysts say it is important to monitor inventory levels.

Yet outside the United States, where data is plentiful and still shows bloated inventories C-STK-T-EIA , reliable data is difficult to come by.

There is some suggestion that OPEC has been selling oil out of its own stocks in order to meet customer demand despite some production cuts it made earlier this year. fuel inventories around Asia's oil trading hub of Singapore have also fallen, although it is not clear whether this is to meet strong demand or if this is to create storage space in anticipation of more supplies coming. Murky oil inventory picture leaves market grappling for clarity

CHART: What tighter oil supply?

http://tmsnrt.rs/2pElIP6

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