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UPDATE 2-Oil prices claw back losses, but oversupply still weighs

Published 20/04/2017, 05:20 pm
© Reuters. UPDATE 2-Oil prices claw back losses, but oversupply still weighs
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* Kuwait expects OPEC-led output cut to be extended beyond June

* Falling U.S. crude stocks also offer some support to crude

* But rising U.S. production, surge in gasoline stocks weigh

* Record Chinese gasoline exports also weigh on market (Adds Kuwait, Saudi comments, updates prices)

By Henning Gloystein

SINGAPORE, April 20 (Reuters) - Oil prices regained some ground on Thursday after steep losses the previous day, as Kuwait said it expected an OPEC-led effort to cut supplies would be extended beyond the middle of the year.

Brent crude futures LCOc1 were at $53.34 per barrel at 0715 GMT, up 41 cents, or 0.77 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 32 cents, or 0.63 percent, to $50.76 a barrel.

Traders said that the gains followed comments by OPEC-members Saudi Arabia and Kuwait that an effort by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year would be extended beyond June. reduction in commercial U.S. crude stocks C-STK-T-EIA , which fell by 1 million barrels last week to 532.34 million barrels, according to the U.S. Energy Information Administration (EIA), also supported prices, traders said.

The price increases on Thursday followed a more than 3.5 percent drop in both crude benchmarks during the previous session after the EIA reported surging gasoline inventories as well as another rise in U.S. crude oil production to 9.25 million barrels per day (bpd), up almost 10 percent since mid-2016 C-OUT-T-EIA .

U.S. gasoline stocks posted a counter-seasonal build of 1.5 million barrels, because of rising refining activity USOILG=ECI .

Traders said that the rising U.S. crude production posed a concern that the oil supply overhang would continue, while the jump in gasoline stocks implied a stutter in demand.

"The fact that gasoline stocks rose... worried traders that demand is not as strong as many thought," said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Overall, global fuel markets remain bloated, and Saudi Arabian Energy Minister Khalid al-Falih was quoted on Thursday in an interview with the Saudi-owned al-Hayat newspaper that supplies remained elevated in part because traders were selling supplies out of tanker storage. China, an ongoing fuel supply overhang is persisting as there were signs that Chinese refiners were using record crude oil imports to produce more fuel like gasoline and diesel than the country can absorb. March gasoline output rose 2.5 percent year on year to 11.24 million tonnes, the highest level since at least April 2014, data from China's National Bureau of Statistics showed on Wednesday, adding fuel into an Asian market that is already well supplied.

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