Oil rebounds on falling US output

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London (AFP)

World oil prices rebounded Wednesday into positive territory on news of a fresh fall in US crude production.

Around 1700 GMT, US benchmark West Texas Intermediate (WTI) for delivery in May gained 68 cents to $41.76 a barrel, reversing earlier losses.

Brent North Sea crude for June delivery won 73 cents to $44.76 a barrel compared with Tuesday's closing level.

US oil output continued to fall last week as weak prices and brimming stockpiles hit domestic producers, government data showed Wednesday.

The Department of Energy (DoE) report for the week to April 15 showed a 24,000-barrel fall in production to 8.95 million barrels a day.

It was the second straight week below the nine million barrel a day threshold and more than 600,000 barrels below the mid-2015 peak of just over 9.6 million barrels a day.

The data came days after a meeting on the oversupplied market between OPEC and non-OPEC producers, including Russia but not the United States, failed to produce an agreement on capping production.

The data showed that even if other producers are not reacting to the crash in crude prices, US drillers are.

The department's Energy Information Agency forecasts that US production will fall steadily to average 8.6 million barrels a day this year, down by 800,000 barrels from last year, and 8.0 million barrels a day in 2017.

Despite the lower output, the EIA said Wednesday that US commercial stockpiles of crude remain at near-record levels. Stockpiles rose by 2.1 million barrels last week to 538.6 million barrels.

Gasoline and other refined products also remained at very high levels, adding more downward pressure to prices.

The market had ended a four-day losing streak on Tuesday, surging also on the back of the weak dollar.

A faltering greenback makes dollar-denominated crude cheaper for buyers using stronger currencies, thereby stimulating demand.

Earlier on Wednesday, the oil market had fallen after petroleum workers called off a strike in key OPEC producer Kuwait, quashing hopes the disruption could help ease a persistent supply glut.

The Kuwait Oil Workers Union ended their mass action and decided to return to work, hours after a fresh appeal by the acting oil minister.

The strike, which began on Sunday, had slashed Kuwait's crude and natural gas production by more than half.

The world's major crude producers met in Doha last Sunday to discuss calls to freeze output, but they failed to reach a deal.

Bernard Aw, market strategist at IG Markets Singapore, said that while Kuwait's strike pointed to a momentary easing of supply conditions, the general trend of oversupply remains.

"The strike has had a very short-term impact... It's hardly a dent to global oil production itself," he told AFP.

"Everybody more or less knew that the strike was not going to last very long, this is just the market reacting to it."

In Kuwait, the striking workers said they called off their mass action "in respect for the emir and in loyalty to him".