Oil rescued from price lows by Libyan supply disruption

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"The ever-expanding USA supply continues to pose significant downside risk to oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

As crisis-stricken Venezuela is struggling with a steep decline in its oil production, India's average oil imports from the Latin American OPEC member have slumped over the last few months to their lowest level since 2012, Reuters reported on Tuesday, quoting industry and shipping sources.

Weighing on global markets has been a relentless rise in USA crude oil production C-OUT-T-EIA, which has soared by nearly a quarter since mid-2016 to 10.37 million bpd, overtaking output by top exporter Saudi Arabia.

Oil prices shot up more than 3 percent in Friday trading after oil and gas services company Baker Hughes reported a dip in rig activity in North America.

Motive Enterprises LLC shut down the large crude distillation unit at its 603,000-barrel-per-day Port Arthur, Texas refinery Traders are looking to take advantage of the current status of oil in the markets, and increase their portfolios.

According to Baker Hughes energy services firm, United States energy companies cut oil rigs for the first time in nearly two months, with drillers cutting back four rigs, to 796.

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However, if predictions from Warren Patterson, a commodities strategist at ING Groep NV, prove accurate, Iran has nothing to worry about: because US activity is angering OPEC allies to the degree they will soon abandon the cartel's production cutback deal, pump all out, and drive prices back down again.

Brent crude futures were at $65.11 a barrel at 9.20am GMT, down 38c from their previous close.

Crude oil prices reached $65 on Monday after a drop in prices earlier in the year. "This would see shale oil production soar by 1.5 million bpd within a year – enough to cover the total increase in global oil demand", Commerzbank said in a note.

Energy Information Administration data shows that exports have averaged about 1.5 million barrels over the past six months, nearly double the level in the previous six months, with Asia being the biggest buyer.

The news is not likely to change the outlook for rising USA production which is now up to 10.37 million barrels per day (bpd). Furthermore, the futures hub at Cushing, Oklahoma is also expected to show a build. Gasoline futures in NY are down 0.2% at $1.8895 a gallon.