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Oil falls as rising US output outweighs strong China data

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SINGAPORE: Oil prices extended falls from the previous two days on Wednesday as soaring US production outweighed strong China data that makes more imports by the world’s biggest crude buyer likely. US West Texas Intermediate (WTI) crude futures CLc1 were at $60.65 a barrel at 0651 GMT, down 6 cents, or 0.1 per cent, from their previous close. Brent crude futures were at $64.47 per barrel, down 17 cents, or 0.26 per cent.


Brent and WTI have shed around 1.5 and 2.4 per cent since the start of the week, with prices hit by concerns over a relentless rise in US crude oil production that has also been contributing to increasing inventories.


US crude production has soared by almost a quarter since mid-2016 to 10.37 million barrels per day (bpd), overtaking output by top exporter Saudi Arabia.


US production is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (IEA). Rising output, as well as seasonally low demand, mean that US crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday.


As a result, crude prices have not returned to their January highs of over $70 per barrel for Brent and almost $67 for WTI.


US bank Goldman Sachs said in a note that there was a “potentially large increase in (US) drilling activity in coming weeks”.


“The ever-expanding US supply continues to pose significant downside risk to oil prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA. Weekly US crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday. — Reuters


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