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Oil Prices Steady as Lower OPEC Output Outweighs Trade Tension

Investing.com - Oil prices held steady on Thursday as reports that OPEC is keeping supply tight outweighed risk-off sentiment stemming from Sino-U.S. trade uncertainty.

New York-traded West Texas Intermediate crude futures were nearly a dollar up from Wednesday's lows at $62.13 a barrel by 7:16 AM ET (11:16 GMT), Brent crude futures, the benchmark for oil prices outside the U.S., edged forward 22 cents, or 0.3%, to $70.59.

A survey from S&P Global (NYSE:SPGI) Platts released on Thursday showed that OPEC’s collective production held relatively steady in April. After fourth months of declines, “tightening the oil market considerably,” output rose by just 30,000 barrels per day (bpd) to 30.26 million bpd.

The survey found that production levels among members varied, with Saudi Arabia producing at a 15-month low, while Iran’s output fell to levels that were even lower than at previous times when it was under U.S. sanctions.

Despite large increases in output from Iraq and Nigeria, compliance with the output restraint agreement was 116% for the 11 members with quotas.

A Gulf source told Reuters on Wednesday that Saudi Arabia and other Gulf producers would satisfy requests for oil from countries that can no longer buy from Iran because of the latest U.S. sanctions, but added that Saudi output will stay below the officially agreed limit through June, and that exports would remain below 7 million barrels a day.

An unexpected drop in weekly inventories stateside had also supported oil prices on Wednesday.

These factors have led to prices being flat so far this week despite fears that the escalating U.S.-China dispute will damp global oil demand.

Top trade negotiators from Beijing and the U.S. meet up in Washington Thursday after U.S. President Donald Trump threatened to increase tariffs on hundreds of billions of dollars in Chinese imports.

Trump claimed that China “broke the deal”, while Beijing responded that it was prepared to defend its interests.

In other energy trading, gasoline futures rose 0.2% at $1.9785 a gallon by 7:18 AM ET (11:18 GMT), while heating oil was unchanged at $2.0563 a gallon.

Lastly, natural gas futures traded down 0.6% at $2.595 per million British thermal unit.

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