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UPDATE 1-Oil prices fall as White House proposes U.S. oil reserve sales

* Trump budget plan flags sale of half U.S. oil reserves

* Sale from late 2018 aimed at raising $16.5 billion

* U.S. strategic reserves stand at 688 million barrels

* Move would undermine OPEC-led effort to tighten markets

* Move comes as Goldman warns of renewed 2018 oil glut (Releads with potential U.S. oil reserve sale)

SINGAPORE, May 23 (Reuters) - Oil prices fell on Tuesday after U.S. President Donald Trump proposed the sale of of half of the country's strategic oil reserves in his budget plan, just as producer club OPEC and its allies are cut back output to tighten the market.

After rising in Asian morning trading, Brent crude futures reversed their gains and were at $53.71 per barrel at 0208 GMT, down 16 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $51.00, down 13 cents, or 0.3 percent.

Traders said there was no bigger move yet as most traders in the United States and Europe, where the vast majority of crude futures trading takes place, were out of office at this hour.

The White House plan would sell off half of the nation's emergency oil stockpile to raise $16.5 billion from October 2018, documents released by the administration late on Monday showed.

Presidential budgets are often ignored by the U.S. Congress, which controls federal purse strings.

Any large release of U.S. strategic reserves would jolt oil markets, where the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, have pledged to cut supplies by 1.8 million barrels per day (bpd) in order to tighten the market and prop up prices.

OPEC and other participating producers will meet on May 25 to discuss extending the period of the cut from covering just the first half of this year to all of 2017 and the first quarter of 2018.

WORLD'S BIGGEST RESERVES

The U.S. strategic petroleum reserves (SPR), the world's biggest, currently stand around 688 million barrels, a week's worth of global oil demand. <SPR-STK-T-EIA>,

U.S. production <C-OUT-T-EIA> is already at 9.3 million bpd, not far off levels of top suppliers Saudi Arabia and Russia.

The moves comes just after U.S. bank Goldman Sachs warned of "risks for a renewed surplus later next year if OPEC and Russia's production rises to their expanding capacity and shale grows at an unbridled rate."

Demand may also slow, according to OECD data.

"Quarterly growth of real gross domestic product (GDP) in the OECD area decelerated sharply to 0.4 percent in the first quarter of 2017, compared with 0.7 percent in the previous quarter, according to provisional estimates," the Organisation for Economic Co-operation and Development (OECD) said on Tuesday.

"Our macroeconomic view remains ... price-negative, which is likely to affect the medium-term demand for crude oil," said Marex Spectron. (Reporting by Henning Gloystein; Editing by Joseph Radford)