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Oil prices stable after two-day decline, but rising US output drags

Oil price rises have made US shale oil production profitable

Signs of strength in the US economy and data showing American explorers curtailed drilling activity is helping oil hold gains after its biggest jump in seven months.

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.

Hedge funds increased bets on falling West Texas Intermediate crude prices by the most this year, according to the U.S. Commodity Futures Trading Commission.

The crude oil prices are falling because of fears that rising USA production could lead to even larger volumes of stocks.

However, if predictions from Warren Patterson, a commodities strategist at ING Groep NV, prove accurate, Iran has nothing to worry about: because USA 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.

USA oil production gains nevertheless are offsetting an effort led by the Organization of Petroleum Exporting Countries to cut into the surplus on five-year oil inventories through output curtailments. While there's renewed confidence over demand on a brighter economic outlook following a better-than-expected jobs report in the United States, expanding American production continues to remain a challenge to the Organisation of Petroleum Exporting Countries and its allies including Russian Federation that are trying to prop up prices via output curbs.

Crude oil prices reached $65 on Monday after a drop in prices earlier in the year.

Brent crude futures LCOc1 were at $64.65 per barrel, up just 1 cent. The global benchmark traded at a $3.58 premium to May WTI.

That is more than top exporter Saudi Arabia producers and almost as much as Russian Federation pumps out, at nearly 11 million bpd.

Official weekly US crude oil production and inventory figures are due to be published by the Energy Information Administration (EIA) later on Wednesday.

The predictions and the forecasts for the oil production are looking grim at an expected 11 million barrels per day and more by the end of the year.

Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was down 0.5%, at $1.89 a gallon.