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US Crude Oil production rose 215,000 BPD to 10.47-M BPD in March, the highest on record, the Energy Information Administration (EIA) said in a monthly report Thursday.

While hedge funds invested in USA oil are betting pipeline bottlenecks will make Texas crude even cheaper, trading giants are seeing an opportunity to export millions of barrels as shale output continues to surge.

Russia, one of the world's largest crude producers, and the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut their combined output by 1.8 million bpd in order to smooth out bloated oil inventories and prop up prices.

Total products supplied over the last four-week period averaged about 20.7 million barrels per day, up by 1.3 percent from the same period previous year. The US oil industry continues to suffer from infrastructure bottlenecks between key oil producing areas and major ports and pipelines.

LLS traded on Thursday at $9 more than US futures - making it almost comparable to Brent crude.

Brent crude was down 38 cents, or 0.5 percent, at $77.12 per barrel at 0643 GMT, after settling the last session up 2.8 percent. For the week, WTI was on track to drop about 3 per cent, adding to last week's near 5 per cent decline.

Oil had surged earlier this month - with benchmark Brent climbing above $80 a barrel - driven by Donald Trump's decision to renew American sanctions on OPEC member Iran and as Venezuelan output plunged amid an economic crisis. That spread has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland.

US producers continue to ramp up output, which reached a new high of 10.77 in the last week of May.

Sources told Reuters last week that Saudi Arabia, the effective leader of OPEC, and Russian Federation were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.

"The fact that we saw the Saudi/Russia announcement last week could have attracted some interest in narrowing the spread, given that we were looking for some of the geopolitical risk (in Brent) to be removed, but that's been overtaken by the domestic widening in crude prices in the US", Hansen said. Crude grades on the U.S. Gulf Coast are surging, with prices in East Houston the strongest versus WTI since at least 2016 and Light Louisiana Sweet the strongest in three years. But Brent recovered later in the week.

Following Saudi Arabia and Russia's proposal to restore output, Rosneft PJSC, Russia's largest oil company, is testing its capacity to bring back production it cut under a deal between Moscow and OPEC, Renaissance Capital said.