Oil Gains as Libyan Crude Drop Offsets What OPEC Curbs Couldn't

US crude futures surged to almost a two-week high after EIA reported that crude inventories rose 867,000 barrels last week, almost half the build expected.

The West Texas Intermediate for May Delivery added 1.14 US dollar to settle at 49.51 dollars a barrel on the New York Mercantile Exchange, while Brent crude for May delivery increased 1.09 dollars to close at 52.42 dollars a barrel on the London ICE Futures Exchange.

"Lower oil prices are going to force OPEC into a decision to extend their production cuts for another six months", speculated Andy Lipow, president of energy consulting firm Lipow Oil Associates.

US supplies of gasoline and distillates dropped more than expected last week and refinery activity climbed, raising the potential for stronger crude demand.

Brent crude futures settled US$1.09, or 2.1 per cent, higher at US$52.42 a barrel after hitting a session high of US$52.46, the highest since March 16.

Oil prices settled higher Thursday, with West Texas Intermediate crude finishing at its highest level in more than three weeks.

As armed protesters block the Sharara and Wafa oilfields in Libya, oil production in the country has fallen by more than 250,000bpd this week.

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The falls came after two days of price increases which supported Brent above $50 a barrel and lifted WTI close to that level.

Oil output climbed further to above 9.1 million barrels a day.

Or that overall USA crude inventories have soared to record levels.

OPEC, along with other producers including Russian Federation, aims to cut output by nearly 1.8 million bpd during the first half of the year.

Opec member Libya was excluded from the cuts, agreed late previous year, as the country's oil sector fell victim to the unrest that followed the toppling of Muammar Gaddafi in 2011.

Still, the EIA data is bullish when compared with consensus estimates, which were calling for a 2 million barrel increase in crude inventories week-over-week, according to KLR Group analysts.

As OPEC and especially Saudi Arabia cut their production, other producers not participating in the cuts have been quick to fill the supply gap and gain market share.

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