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Oil futures little changed as decline in US inventories offsets OPEC dampener

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Crude oil futures were little changed in early Asian trade Friday, having risen in the previous session after a decline in U.S. oil inventories offset a non-eventful OPEC meeting.

Benchmark front-month Western Texas Intermediate light, sweet crude oil futures on the New York Mercantile Exchange were last up 0.1 percent at $49.21 on Friday, after settling 0.3 percent or 16 cents higher at $49.17 a barrel on Thursday.

European Brent crude was last also up 0.1 percent at $50.11 a barrel after settling 0.6 percent or 32 cents higher at $50.04 a barrel on Thursday—its first settlement above $50 a barrel in seven months.

OPEC refrained from changing its oil output policy on Thursday after members failed to agree on a new production ceiling, an OPEC delegate told Reuters.

"OPEC unsurprisingly failed to agree on anything. The market got very excited about a potential output ceiling despite OPEC usually ignoring these ceilings in the past and key members, Saudi Arabia and Iran, fighting multiple proxy wars against each other," said spread better IG's market analyst, Angus Nicholson.

Oil prices found support instead in U.S. Energy Information Administration's announcement of a fall in 1.4 million barrels of crude inventories, the third weekly decline in a row.

Oil prices may find further support, said US Global Investor's chief executive officer, Frank Holmes.

"After Memorial Day in America, it's the big driving season," he told CNBC's "The Rundown".

The outcome of the latest OPEC meeting was in line with market expectations of a non-announcement, after a April meeting in Doha disappointed investors as talks of an output freeze dissipated .

Oil prices have fallen by as much as 70 percent since the summer of 2014 due to burgeoning energy output and a slowdown in global growth.

Despite steep losses that have hit major oil producing economies, OPEC has stood pat on its production policy and is now pumping around 32 million barrels a day as kingpin Saudi Arabia persisted with its strategy of low-cost production to squeeze out smaller and higher-cost shale oil producers.

With its most recent non-action however, OPEC is effectively ceding its position as a price-maker, said Neil Beveridge, senior analyst at Bernstein Research.

"OPEC is saying we'll let the market decide on price rather than OPEC...Effectively, shale is now the swing producer in the global market, it's not OPEC," he told CNBC's "Squawk Box".

Still strong global demand is likely to boost oil prices in the second half of 2016, particularly as non-OPEC production falls amid supply disruptions in Canada, Nigeria and potentially Venezuela, Beveridge added.

Iran's return to the market after Western sanctions were lifted has added to supply pressures as the country's refused to budge on increasing its supply.

Despite simmering tensions, the mood at OPEC's latest meeting was far more conciliatory than previous ones.

Abdalla Salem el-Badri, Secretary General of OPEC told CNBC as the meeting got underway on Thursday that for the first time in many months there was a "very positive" atmosphere among the cartel's members. He added he was pleased with the way the oil market was recovering.

"Because we did not have the public displays of discontent like in December, they can spin the non-agreement on a production ceiling as a sign of OPEC unity. The party line is that they all agreed the market is moving in the right direction," wrote Helima Croft, global head of commodity strategy at RBC Capital Markets, from Vienna.

OPEC last decided to change output in December 2008.

Holly Ellyatt contributed to this article

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