Oil hits $50 to trade at 3-week high

Oil hits $50 to trade at 3-week high

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK7, -0.36% recently traded at $50.17 a barrel, down 18 cents in the Globex electronic session.

Brent crude is expected to average $US57.25 per barrel in 2017, slightly lower than last month's forecast of $US57.52, the poll of 32 economists and analysts showed.

"I see no sign from OPEC and Saudi Arabia that they will not roll over the cut into the second half of the year. the market is about to go from supply surplus to deficit on crude " said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.

Since January, the oil market has been stuck in a tug-of-war supported by OPEC cuts, but weighed down by increasing output from USA shale producers.

Despite Friday's dips, crude prices remain 3-4 percent higher than they were at the start of the three-day rally on Tuesday, and analysts said that the market was gradually tightening.

Speculation OPEC will extend its deal to curb output and ease a global glut is sending oil toward its biggest weekly increase this year.

The increase in January followed US output cuts in December, according to the EIA.

China imported 1.19 MMbbl/d from Russian Federation in February, up 4.5% on the same month past year and also above the 1.08 MMbbl/d recorded in January.

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The United States Oil Fund (USO) jumped 2.2% Wednesday in regular trading.

Prices have gained almost 5% the past three sessions for both West Texas Intermediate and the global Brent benchmark after prices last week hit their lowest levels since before the deal between the Organization of the Petroleum Exporting Countries and heavyweight producers such as Russian Federation. Distillate stockpiles, which include diesel and heating oil, fell by 1.9 million barrels, versus expectations for a 1.4 million-barrel drop, according to EIA data.

Brent crude futures have made the biggest losses across global asset classes this quarter and in March, the contracts made the biggest monthly losses since July as growing USA crude inventories and drilling activity counterbalance production cuts elsewhere in the world. Refineries processed 16.2 million barrels a day of crude last week, up 425,000 barrels from the prior week, according to the EIA.

Since the beginning of 2017, inventories have increased 10 out of 11 weeks.

But so far, alternative oil supplies, including from the USA where production is soaring, and doubts that Russian Federation was complying with its promised cuts, have prevented the market from re-balancing.

The 300,000-bpd reduction that Russian Federation agreed to represents 2.7 percent of its October output, which exceeded 11 million bpd.

Bigger-than-expected drawdowns in US petroleum-product stockpiles and gains in refinery activity raised expectations of higher demand for crude.

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