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After a selloff, oil prices are now easing up as supply concerns take hold

The oil prices rose slightly on Thursday after sharp drops the day before, driven by signs that Saudi Arabia can produce more and the fact that the U.S. economic contraction in the first quarter.

Brent crude futures increased 16 cents OR 0.3% to $61.22 per barrel. U.S. West Texas Intermediate Crude Futures rose 6 cents, or 0.1% to $58.27. The two contracts closed Wednesday at their lowest levels in four years.

Sources say Saudi Arabian officials have informed allies and experts in the industry that the kingdom does not want to support the oil market by cutting further supplies and is able to handle a long period of low oil prices.

Three sources familiar with OPEC+ discussions told us earlier this month that several OPEC+ member countries will propose the group increases oil production in June by a significant amount for a second month in a row.

The U.S. economy shrank for the first three-year period in the first quarter. Businesses rushed to import goods in order to avoid tariff-related costs, highlighting the chaotic nature of President Donald Trump’s trade policy.

A poll suggests that Trump's tariffs make it likely the global economy will slide into recession in 2019.

An oil price poll on Wednesday showed that OPEC+’s decision to reduce supplies and a demand outlook clouded with trade disputes between China and the U.S. will have a negative impact on prices in 2018.

In April, a survey of 40 analysts and economists projected that Brent crude would average $68.98 per barrel in 2025. This is down from the estimate of $72.94 in March. U.S. crude oil is forecast to average $65.08 per barrel in 2025, down from last month's $69.16 estimate.

The Energy Information Administration reported on Wednesday that U.S. crude stockpiles dropped unexpectedly by 2.7m barrels due to higher exports and refinery demands, as opposed to analysts' expectations, which were based on a poll, of a 429,000-barrel increase. (Reporting from Arathy S. Somasekhar, Houston Editing by Shri Navaratnam.)

(source: Reuters)