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Oil pumps up as market starts to move back into balance

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The OPEC flag and the OPEC logo are seen before a news conference in Vienn

The aim was to reduce a glut in global oil supply that has depressed prices, which now stand at around $48-$51 per barrel. Last week's oil rig count increased by eight sites, bringing the total to 617 active oil rigs - the highest since the end of September 2015.

CBC News reported last week that customers of Toronto-Dominion Bank were moved to higher-fee accounts or had their overdraft and credit card limits increased without their knowledge. In the meantime, the technical picture still looks weak and further downside can not be ruled out.

"Of course, on many occasions in the past, non-OPEC producers have simply reaped the benefits of OPEC supply reductions". Oil production rose for a fourth week to 9.1 million barrels a day.

Saudi Arabia has cut output by more than its share under the November 2016 deal.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of petroleum products. We believe that unless all producers come fully on board to implement their quotas, oil prices could remain under pressure as other factors are outweighing the supply cuts.

In terms of oil supply and demand, the market is still weighing the impact of the rising USA shale production against OPEC's cuts, and if the growing American output is not upsetting the cartel's efforts to curb supply, rebalance the market and lift prices. East Coast (PADD 1) imports made up almost half of the total USA import growth, climbing 242,000 bpd to average 865,000 bpd for the year. Meanwhile, given that Libya and Nigeria are exempt, a rebound in their production will increase Opec output even if other members stick to their quotas. However, in January we saw an abrupt about turn with OECD stocks increasing by 48 mb (1.5 mb/d) and preliminary data for February suggests they have fallen back again only modestly.

There are signs that USA oil production will continue to grow.

Given a bit more time, the world's bloated oil inventories will decline as production cuts by the Organization of Petroleum Exporting Countries and Russian Federation take effect, while fuel consumption remains strong, the banks predict. USA shale oil output hit a low of around 8.46 million bpd in July 2016.

Dollar trends are likely to have an important impact on oil prices during the NY session with the latest COT data watched very closely late in USA trading.

On the inventory side, U.S. oil stocks have increased for nine straight weeks, touching a record 528 million barrels, a record high.

Thomson Reuters Oil Research and Forecasts data shows around 714 million barrels of oil are being shipped to Asia this month, up 3 percent since December when the cuts were announced. At 157.30 million barrels, distillate supplies are 2.5% lower than the year-ago level and are close to the upper half of the average range for this time of the year. Analysts anticipate that regaining the old levels may be hard without significant drawdown in inventories.

Looking ahead, given the excessive long positions in the market, it was natural that some of those positions got liquidated in the absence of positive triggers over the past several weeks.

Brent crude futures traded at US$52.02 a barrel at 1:51 p.m. Friday on the ICE Futures Europe exchange in London. The short-term bias has now turned bearish with immediate stiff resistance seen at Rs 3,335-3,370 area.

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