Politics

REFILE-Oil rises on tightening supplies; ample U.S. output caps gains

(Corrects day in paragraph 1 to Thursday, not Wednesday)

* Inventories fell for first week in four - U.S. DoE

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

* Persistent rise in U.S. output caps gains - analyst

By Aaron Sheldrick and Colin Packham

TOKYO/SYDNEY, April 18 (Reuters) - Oil prices edged higheron Thursday, supported by ongoing OPEC-led supply cuts and asurprise fall in U.S. crude inventories, although gains werecapped by strong U.S. production.

Brent crude futures LCOc1 were at $71.71 a barrel at 0500GMT, up 9 cents, or 0.1 percent, from their last close and notfar off Wednesday's five-month high of $72.27 a barrel.

U.S. West Texas Intermediate (WTI) crude futures CLc1 wereat $63.81 per barrel, up 5 cents, or 0.1 percent.

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) showed on Wednesday.

"The fundamental backdrop for oil prices remains broadlypositive amidst tighter global supply for the current term."said Benjamin Lu, commodities analyst at Singapore-basedbrokerage Phillip Futures.

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.

But rising U.S. oil production and concerns over the U.S.-China trade dispute kept gains 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," Abhishek Kumar, Head ofAnalytics at Interfax Energy in London.

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.

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.

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

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

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

colin.packham@thomsonreuters.com colin.packham.thomsonreuters.com@reuters.net


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