Oil prices slip, but ongoing supply cuts support

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UPDATE 3-Oil prices slip, but ongoing supply cuts support

* U.S. inventories last week fell for first time in fourweeks

* Interactive graphic on inventories https://tmsnrt.rs/2XfuQqn

* Persistent rise in U.S. output caps gains -analyst (Recasts on falling prices)

By Aaron Sheldrick and Colin Packham

TOKYO/SYDNEY, April 18 (Reuters) - Oil markets fell onThursday despite a surprise decline in U.S. inventories, but theprice drops were tempered by a smaller-than-expected reductionin gasoline stocks and ongoing OPEC-led supply cuts.

Brent crude futures LCOc1 were at $71.43 a barrel at 0700GMT, down 19 cents, or 0.3 percent, from their last close andfurther away from Wednesday's five-month high of $72.27 abarrel.

U.S. West Texas Intermediate (WTI) crude futures CLc1 wereat $63.62 per barrel, down 14 cents, or 0.2 percent.

Both contracts had traded slightly higher earlier in theday.

U.S. crude inventories USOILC=ECI fell by 1.4 millionbarrels in the week to April 12, compared with analystexpectations for an increase of 1.7 million barrels, Departmentof Energy (DoE) data showed on Wednesday. urn:newsml:reuters.com:*:nL1N21Z0RE

"The unexpected drawdown in U.S. commercial crude oil stockswas balanced by lower-than-expected withdrawals in the country'sgasoline and distillate inventories," said Abhishek Kumar, headof analytics at Interfax Energy in London.

Gasoline stocks USOILG=ECI fell by 1.2 million barrels,less than analyst expectations in a Reuters poll for a 2.1million-barrel drop.

Distillate stockpiles USOILD=ECI , which include diesel andheating oil, fell by 362,000 barrels, also not as much asforecasts for a 846,000-barrel drawdown, the EIA data showed.

Prices have been supported this year by an agreement reachedby the Organization of the Petroleum Exporting Countries (OPEC)and its allies, including Russia, to limit their oil output by1.2 million barrels per day.

Global supply has also been tightened further by U.S.sanctions on OPEC members Venezuela and Iran.

Iran's crude exports have dropped in April to their lowestdaily level this year, tanker data showed and industry sourcessaid, suggesting a drawdown in buyer interest ahead of expectedfurther pressure from Washington. urn:newsml:reuters.com:*:nL5N21X4P4

Growing U.S. oil production and concerns over the U.S.-China trade dispute are keeping prices in check.

"A persistent rise in U.S. oil output, together withlingering demand-side concerns emerging from the U.S.-Chinatrade dispute, is limiting price gains," Kumar said.

U.S. crude oil output from seven major shale formations wasexpected to rise by about 80,000 bpd in May to a record 8.46million bpd, the U.S. Energy Information Administration said inits monthly report on Monday. urn:newsml:reuters.com:*:nL1N21X0YP

Surging U.S. production has filled some of the gap insupplies, although not all of the lost production can beimmediately replaced by U.S. shale oil due to refineryconfigurations.

U.S. crude inventories, weekly changes since 2017   https://tmsnrt.rs/2XlX17b
CHART: Brent oil may fall to $70.32urn:newsml:reuters.com:*:nL3N2200OV
CHART: U.S. oil may test support at $62.80urn:newsml:reuters.com:*:nL3N2200RS
(Reporting by Aaron Sheldrick, Colin Packham and Jane Chung;Editing by Kenneth Maxwell and Joseph Radford) ((colin.packham@thomsonreuters.com; +61-2 9321 8161; ReutersMessaging: colin.packham.thomsonreuters.com@reuters.net))

This article appears in: Stocks , World Markets , Oil , Commodities

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