U.S. crude slips 57 cents, retreating from mid-2015 highs

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Oil in NY has traded above $60 a barrel and the global benchmark Brent has held above $66 since December as the Organization of Petroleum Exporting Countries (Opec) and allied suppliers capped output.

Brent crude futures fell 45 cents, to $67.62 a barrel.

Oil has held above $60 a barrel since late-December in NY, with United States crude stockpiles contracting and American oil drilling stalling out.

Rising US production is the main factor countering production cuts led by the Middle East dominated Organisation of the Petroleum Exporting Countries (Opec) and by Russian Federation, which began in January previous year and are set to last through 2018.

Oil prices closed at fresh three-year highs Tuesday, as geopolitical risk and confidence in global growth continued to buoy markets.

A third OPEC source said market fundamentals did not justify the price rally.

"We expect oil demand growth to outpace non-OPEC supply growth in both 2018 and 2019", analysts stated. Economic collapse is leading to involuntary production cuts in Venezuela, another OPEC member.

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Supply reports this week from industry group the American Petroleum Institute and the US government's Energy Information Administration are expected to show USA crude stocks fell 3.9 million barrels, an eighth week of decline.

There is no sign yet that OPEC is prepared to relax its supply restraint.

The report also noted that the North Sea Brent barrel stands at $64 per barrel, which is the highest it has been since November 2014, the start of the oil price crisis.

However, Innes added that Middle East turmoil would remain a key focus for oil markets and had the potential to "send oil prices rocketing higher".

"The U.S. oil price is now into a range that is anticipated to attract increased shale oil production", said Ric Spooner, chief market analyst at CMC Markets in Sydney.

The EIA forecast that US crude oil production will average 10.3 million barrels per day in 2018 and 10.8 million barrels per day in 2019, breaking historical records for annual average production.

Even so, US production is expected soon to rise above 10 million barrels per day, close to Saudi levels, due largely to soaring output from shale drillers, government data shows.