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Oil prices edge up on expected OPEC output cuts, but swelling U.S. supply caps gains



SINGAPORE (Reuters) – Oil prices firmed on Friday as traders expected OPEC and Russia to agree on production cuts next week, although swelling U.S. supplies kept markets in check.

A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $51.55 per barrel at 0203 GMT, up 10 cents, or 0.2 percent from their last settlement.

International Brent crude oil futures LCOc1 were up 15 cents, or 0.3 percent, at $59.66 per barrel.

Despite the firmer prices, crude oil has lost almost a third in value since early October because of an emerging supply glut following a global surge in production, including from the United States, Russia and by the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC).

To rein in the glut, ANZ bank said on Friday that OPEC and its main partner Russia were “moving closer to an agreement around further production cuts”.

OPEC and Russia will gather on Dec. 6 and 7 in Vienna to discuss output policy.

Before that, the world’s top three producers – the United States, Russia and Saudi Arabia – will be part of a meeting of the Group of 20 industrialized nations in Buenos Aires, Argentina, this weekend.

Part of the glut is swelling supply in the United States, where commercial crude oil inventories C-STK-T-EIA rose by 3.6 million barrels in the week to Nov. 23 to 450.49 million barrels, according to the Energy Information Administration (EIA). Production C-OUT-T-EIA remained at a record 11.7 million barrels per day (bpd).

Crude reserves increased 6.4 billion barrels, or 19.5 percent, to 39.2 billion barrels at year-end 2017, marginally higher than the previous record of 39 billion barrels set in 1970, the EIA said.

“With fears over excessive supply and worries about falling demand the primary themes weighing on oil markets, the outlook for Brent Crude and WTI remains bearish,” said Lukman Otunuga, analyst at futures brokerage FXTM.

Reporting by Henning Gloystein; Editing by Kenneth Maxwell