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Oil hovers around $45 as Opec plans formal meeting in Algiers

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Oil prices rose up as much as 3 percent on Wednesday after a third surprise weekly drop in USA crude stockpiles helped assuage fears over a global oil glut.

Brent crude futures were trading at $46.32 per barrel at 0107 GMT, down 27 cents, or 0.6 percent, from their last settlement.

Another big driver for rising oil prices was American Petroleum Institute data showing a 7.5 million barrel decline in USA crude stockpiles to 507.2 million barrels.

"The expectation of a rapid normalisation of Libyan oil exports is likely to prove illusory, in other words", he added.

Attention of the black gold market is now focused on the official storage data, which is due to be published by the U.S. Energy Information Administration (EIA) in the short run.

Meanwhile, Russia's permanent representative to the Organization of the Petroleum Exporting Countries, Vladimir Voronkov said Russia would back a deal to stabilize oil markets for a year, according to Moscow-based news agency Interfax. "We will have to see if the trends normalize next week", said John Kilduff, partner at NY energy hedge fund Again Capital in NY. Crude oil prices finished off the peak amid doubts over whether that deal could happen.

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"I would not be surprised to see some short-covering in the second half of this week just ahead of the informal OPEC meeting", said Tamas Varga, lead oil analyst at London brokerage PVM Oil Associates.

Crude oil prices rose on Monday from multi-week lows after Venezuela said OPEC and non-OPEC producers were close to a deal to stabilize the market and as clashes in Libya disrupted attempts to boost crude exports.

In the past, analysts have persistently discounted the possibility that OPEC members such as Saudi Arabia, Iran, Nigeria and Libya will agree to production curbs as they protected market share, but some analysts have become more hopeful an agreement can be reached. OPEC ministers can transform the gathering into an extraordinary meeting since they'll all be present, Algerian Energy Minister Noureddine Bouterfa said on public radio.

"Even with a freeze - which would still mean OPEC production is at record levels - we will still be in an oversupplied market", said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

Last week, benchmark Brent crude hit a two-week low and United States light crude fell to a five-week low on concerns about oversupply with increased production by Libya and Nigeria.

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