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Oil prices stay supported, Brent trades

Oil prices remained supported in Asian trade Thursday after strong gains in the previous trading session on expectations that U.S. oil supply has started to slow, and global oil demand is strengthening.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK5, -0.34%  traded at $56.43 a barrel, up 3 cents in the Globex electronic session. June Brent crude LCOK5, +3.29%  on London’s ICE Futures exchange fell $0.22 to $63.10 a barrel.

Oil had risen sharply on Wednesday, with Nymex West Texas Intermediate gaining 6% to its highest level so far this year, after weekly U.S. oil stockpiles rose by just 1.3 million barrels compared to expectations of 3.5 million barrels.

French Bank Societe Generale said the imminent declines expected in U.S. crude output have global ramifications, because they will drive the rebalancing of the global oil market, along with stronger oil demand in the second half of the year.

OPEC’s strategy to cripple and marginalize other higher cost producers has started to work, as cheaper oil has raised demand and global drilling capex cuts have trimmed supply growth, Nomura’s head of Asia oil research Gordon Kwan said.

“Deep capex cuts and existing field declines could erode further supply growth from many non-OPEC projects amidst depressed oil prices,” he said, adding that for the first time, U.S. shale oil output is projected to decline as early as May.

Read: Oil spike today means higher gas prices tomorrow

Oil ‘poised for a breakout’: “This affirms our view that oil prices will continue to trend higher,” Kwan wrote. He maintains his forecasts for Brent crude to average $60, $70 and $80 for 2015, 2016 and 2017 respectively.

Later Thursday, the Organization of the Petroleum Exporting Countries will publish its monthly oil market report with its assessment of the global oil market.

Brent crude has breached the $60 mark in its current rally. “No matter how volatile crude prices are, prices hitting the resistance is a clear sign that prices are poised for a breakout,” analyst Daniel Ang at Philips Futures said.

“From a technical view, we are already seeing crude oil showing bullish signals. Now, with the fundamental view also supporting technical, we become extremely bullish towards the oil market,” he added.

Nymex reformulated gasoline blendstock for May RBK5, -0.23%  — the benchmark gasoline contract — fell a penny to $1.93 a gallon, while May diesel traded at $1.8773, 115 points lower.

ICE gasoil for May changed hands at $571.00 a metric ton, up $10.25 from Wednesday’s settlement.