Oil hits 11-day low on expected surge in United States shale output

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Crude oil closed down sharply by the end of the trading day Wednesday after investors mulled over the latest data set from the U.S. Energy Information Administration.

Meanwhile, on NYMEX (New York Mercantile Exchange) cost of the United States light crude oil decreased $0.11 to stand at $52.30.

Crude fell in the previous two sessions, but it received a boost from comments on Wednesday by the secretary-general of the Organization of the Petroleum Exporting Countries that the group was committed to cutting inventories to the five-year average.

OPEC agreed to cut output by 1.2 million barrels a day for the first six months of 2017, while 11 other non-OPEC countries including Russian Federation agreed to limit supply.

Oil prices regained some ground on Thursday after steep losses the previous day, with a slight drop in USA crude inventories stoking hopes that a push to rein in global oversupply could be gathering at least some momentum. "The soft US CPI (consumer price index) on Friday will ease yields further, also undermining the reflationist markets such as oil and precious metals", he said.

Gasoline stockpiles, however, edged up by 1.5 million barrels, defying expectations for a decline of 2 million, according to a survey conducted by S&P Global Platts. Russian Federation and 10 other non-OPEC producers agreed to cut half as much.The accord has lifted oil prices, which are near $55 a barrel.

Citi analysts say the increase in USA shale production should be offset by extending production curbs agreed between the Organization of the Petroleum Exporting Countries (OPEC) and other major exporters led by Russian Federation.

Brent crude futures were at $53.08 a barrel at 4.30am GMT, up 15c, or 0.3%, from their last close.

Kuwait was the first country to call for extending the production cuts beyond June.

Additionally, Iran added fuel to hopes that OPEC and non-OPEC oil producers could extend their output cuts beyond the initial six-month agreement.

USA supplies of crude are still near records and more than 100 million barrels higher than the five-year average for this time of the year, data compiled from the EIA show. Brent for June settlement fell 45 cents to $54.44 a barrel on the London-based ICE Futures Europe exchange. "Production is up nine straight weeks here to the highest level since August 2015".

The compliance rate with the agreement among OPEC members and some non-members, including Russian Federation, "has been impressive", the International Energy Agency (IEA) said in its monthly oil market report, giving a lift to oil prices.