Published: Thu, March 15, 2018
Money | By Hannah Jacobs

Oil stable on strong China data, but rising U.S. output caps gains

Oil stable on strong China data, but rising U.S. output caps gains

US crude production, pushed up largely by shale oil drilling, is expected to rise above 11 million bpd by late 2018, taking the top spot from Russian Federation, according to the International Energy Agency (IEA).

SINGAPORE, March 14 (Reuters) - Oil prices were stable on Wednesday after posting two days of declines at the start of the week. Crude futures were up by five cents to $60.78 a barrel as of 10:50 a.m. EDT, while Brent rose 9 cents to $64.75 a barrel.

The seen to potentially overtake Russian Federation as the No. 1 oil producer, with output topping 11 million barrels a day as soon as this year.

Rising output, as well as seasonally low demand, mean that USA 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. That compared with analysts' expectations for an increase of 2 million barrels.

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

"Prices in the upper half of the oil price-band will encourage increased supply as United States production grows and countries reduce compliance with their production quotas", said Terry Marshall, a Moody's Senior Vice President.

OPEC also said oil inventories across the mostindustrialized countries rose in January for the first time ineight months, a sign the impact of its output cuts may bewaning.

But this is what's so interesting - Increased production by US petroleum companies didn't happen overnight.

China beat forecasts with a 7.2 percent year-on-year rise in industrial output in the first two months of 2018, while data showed Chinese crude output fell 1.9 percent.

Official weekly USA crude oil production and inventory figures are due to be published by the Energy Information Administration (EIA) later on Wednesday.

The question of whether the Organization of the Petroleum Exporting Countries (OPEC) is close to achieving global supply and demand balance due to its production cuts was raised yet again on Tuesday, with Khalid al Falih, energy minister for Saudi Arabia, quoted as saying it would be better to "overbalance" the market rather than end the cutback deal too early.

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