The benchmark June US light crude futures contract on the New YorkMercantile Exchange (Nymex) was trading flat, after a big $1.02 a barrelrally in New York on Tuesday. By 0740 GMT, the June crude futures wastrading up four cents at $26.93 per barrel compared with the New York close.Traders said although the market was subdued during Asian hours, sentimentwas bullish after factoring in a tighter supply picture from the bullishreport by the American Petroleum Institute (API).

The API said late on Tuesday that US Crude stocks fell 7.9 million barrelsin the week ended April 28, compared to a Reuters survey which had forecastan increase of one million barrels. "This is obviously very bullish forcrude," AG Edwards' analyst Bill O'Grady said.

The bullish API data reversed a six-week trend of swelling crude stocks, butit also showed higher refinery production. The API reported a moderate buildin gasoline and middle distillate stocks of 1.9 million barrels and 3.2million barrels respectively. This helped defuse some of market concern thatgasoline supplies may not be enough to meet its peak summer driving season.The US gasoline futures market had rallied on Tuesday. The US is the world'slargest oil consumer and many US drivers normally take to the roads forholidays during the summer months.

Opec sees output capped
Meanwhile, the oil cartel Opec also commented that it was unlikely to alterits current output ceiling when it next meets in June. Some traders hadexpected Opec to push more supplies into the market as oil demand normallyrises from the third quarter when worldwide refiners run harder tostockbuild heating oil for the northern hemisphere.

Opec president Ali Rodriguez said that Iran and Venezuela agreed that therewas no reason for the oil cartel to raise its production ceiling at ameeting next month. But Rodriguez said an increase from September waspossible "if forecasts on increased demand come true." Rodriguez, who isalso the Venezuelan energy and mines minister, had met with his Iraniancounterpart Bijan Zanganeh on Monday. The same views were echoed by anotherOpec power Kuwait. Kuwait's oil minister Sheikh Saud Nasser al-Sabah saidthat there would be no reason for Opec to increase production in June, ifprices stayed at current levels. Opec's recent rollback of productionrestraints have pushed oil prices down nearly 25 per cent, after rising fromhistoric lows in February 1999 to nine-year high levels of above $34.00levels in early March.