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Crude declined after the USA government was said to have asked Saudi Arabia and other OPEC producers to raise oil supply.

President Donald Trump complained about OPEC and high oil prices in April.

Saudi Arabia and Russian Federation were already discussing raising OPEC and non-OPEC oil output by around 1 million bpd, sources familiar with the matter said on May 25.

It also follows Washington's decision to reimpose sanctions on Iran's crude exports that had previously displaced about 1 million bpd from global markets, the report said. While oil is still in technical price trouble in the short term the correction should soon be over.

Earlier on Tuesday, Bloomberg reported the US government had asked the producers to increase oil production by about 1 million barrels per day (bpd).

At 1326 GMT, ICE August Brent was $1.16 lower at $74.13/b.

Data from market intelligence firm Genscape showed that between May 29 and June 1, crude inventories at the Cushing, Oklahoma, storage hub and delivery point for USA crude futures rose 210,046 barrels, a potentially bearish signal, traders who saw the data said.

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"If you're Russian Federation and Saudi Arabia, the two really big producers, and Saudi Arabia is the only swing producer, then obviously you want that agreement of cooperation because you need to give a counter-balance to this new emerging American powerhouse of exporting crude".

The U.S. government has unofficially asked Saudi Arabia and some other OPEC producers to raise oil output, three OPEC and industry sources said, although it has not requested a specific figure.

"Even if the USA has asked for 1 million, does it mean that OPEC and its allies would raise by 1 million?" the source said.

In addition, investors fear that the OPEC + countries at a June meeting may decide to increase oil production amid a possible drop in supplies from Iran and Venezuela.

OPEC and its partners chose to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry. This mainly led to rise in crude oil prices in futures trade here.

USA crude oil stockpiles were forecast to have fallen for the second consecutive week, a preliminary Reuters poll showed on Monday.


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