Oil prices rise on expected dip in U.S. shale output

By Henning Gloystein

SINGAPORE (Reuters) - Crude prices rose on Tuesday on expectations U.S. shale oil output will record its first monthly decline in over four years, but analysts warned that the broader market remained oversupplied as China's exports rose.

Front-month Brent crude futures were trading up 40 cents a $58.33 a barrel by 0700 GMT, while U.S. crude had risen 42 cents to $52.33.

The U.S. Energy Information Administration expects U.S. shale production to fall by 45,000 barrels to 4.98 million barrels per day in May from April.

That would underscore how record crude output from the U.S. shale boom may be backtracking after global markets saw prices effectively slashed by half since June on oversupply and lacklustre demand.

While political instability in the Middle East also helped push up prices, analysts said that high global production and stocks were capping gains.

"Geopolitical risk in oil markets remains elevated. From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise," JP Morgan said in a note.

In Asia, China exported 750,000 tonnes of crude oil in March, its largest volume since 2006, in a possible sign the world's second largest crude importer is running out of storage capacity.

Analysts also said that China's demand growth would likely slow further.

"With China's Q1 GDP figures about to be released tomorrow, we see very little upside even if prices move up today," Singapore-based brokerage Phillip Futures said.

China's economy is growing at its slowest pace in 25 years and its export sales contracted 15 percent in March, a shock outcome that deepens concern about sputtering Chinese economic growth.

In Japan, a court issued an injunction on Tuesday to prevent the restart of two reactors citing safety concerns, in a blow to Prime Minister Shinzo Abe's push to return to atomic energy four years after the Fukushima crisis and reduce the country's huge energy import bills.

(Editing by Joseph Radford and Biju Dwarakanath)