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Opec cut 'extension' talk lifts price

Market comes back from steep drop in crude as producers signal prolonged output curb

Oil prices regained some ground on Thursday, after steep losses in the previous session, as leading Persian Gulf oil producers signalled a likely extension of Opec-led supply cuts beyond the middle of the year.

Brent crude futures were at $53.43 per barrel at 08:55 GMT, up 50 cents from their last close.

US crude futures were up 43 cents at $50.87 a barrel.

Opec members Saudi Arabia and Kuwait signalled that an effort by the Organization of the Petroleum Exporting Countries (Opec) and other producers, including Russia, to cut oil output was likely to be extended beyond June.

However, bloated inventories weighed. Despite a drop in US crude stocks last week, an unexpected 1.5 million-barrel build in gasoline stocks drove prices more than 3.5% lower on Wednesday.

US crude oil production rose to 9.25 million barrels per day, official data showed, up almost 10% since mid-2016.

"The rebalancing in US crude stocks may have got under way, but concerns of further gasoline builds are rife even as the US summer driving season shifts up a gear," said Stephen Brennock, an analyst with PVM Oil Associates.

"With questions hanging over US gasoline demand, any further product builds will act as a brake on the oil price recovery."

Global fuel stocks are well above the five-year average, and Saudi Energy Minister Khalid al-Falih was quoted on Thursday as saying inventories remained elevated in part because traders were selling supplies out of tanker storage.

In China, signs emerged that refiners were using record crude imports to produce more fuel such as gasoline and diesel than the country can absorb.

China's March gasoline output rose 2.5% year-on-year to 11.24 million tonnes, the highest level since at least April 2014, China's National Bureau of Statistics said, adding fuel into an Asian market that is already well-supplied.

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