* Brent-WTI spread down over 45 pct since April
* Brent held back by high Middle East, West African output
* WTI pushed up by U.S. summer demand, Canadian wildfires
* Technical indicators point to further spread narrowing
(Adds quote, updates prices)
By Henning Gloystein and Florence Tan
SINGAPORE, May 28 (Reuters) - Crude oil prices recovered on Thursday after a two-day slide, although high U.S. stocks and strong global production, along with a firm dollar, were keeping markets under pressure.
The resurgent dollar had weighed on the market earlier in the week, plus concerns that U.S. crude supplies may have started rising again.
Industry group American Petroleum Institute (API) said after the market's settlement that U.S. crude inventories rose by 1.3 million barrels last week, following three weeks of straight withdrawals.
The U.S. dollar index
Front-month Brent futures
Brent's premium over West Texas Intermediate (WTI)
"The market is trying to anticipate what's going to happen tonight," Phillips Futures analyst Daniel Ang in Singapore said, referring to the release of weekly oil inventories data by the Energy Information Administration later on Thursday.
"We're seeing a narrowing of the WTI-Brent spread, which would suggest that U.S. crude inventories are expected to have dropped," he said.
Analysts said in a Reuters poll on Wednesday that crude stocks in the United States probably fell by 900,000 barrels last week, dropping for a fourth straight week.
The American benchmark, meanwhile, received some support from the peak-demand summer driving season, almost a month of steady stock draws that only came to an end this week, and raging Canadian wildfires that forced the evacuation of several oil and gas sands production sites.
Technical market indicators implied that the WTI-Brent spread could narrow further as U.S. oil could rebound into a range of $58.14-$58.41 per barrel while Brent was expected to drop to $61.50 per barrel, according to Reuters technical analyst Wang Tao.
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CHART 1-Brent/WTI spread:
CHART 2-WTI technicals:
CHART 3-Brent technicals:
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(Editing by Richard Pullin and Alan Raybould) ((henning.gloystein@thomsonreuters.com)(+65 6870 3263)(Reuters Messaging:henning.gloystein.thomsonreuters.com@reuters.net))
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