ALSO READOil jumps after Trump fires Rex Tillerson putting Iran nuke deal in focus Rising global oil production likely to overtake demand in 2018: IEA Blackstone may buy majority stake in key Thomson Reuters unit for $17 bn Blackstone bets big on Wall St information biz with Thomson Reuters deal Microsoft tops Thomson Reuters top 100 global tech leaders list
Oil was slightly higher on Wednesday after strong Chinese factory activity, though concern over the pace of growth in U.S. output, as well as other producing nations, limited gains.
The Organization of the Petroleum Exporting Countries said in its monthly report it expects supply from non-members to grow more quickly than it had previously expected.
The group also reported the first increase in oil inventories across the world's most industrialised nations in eight months in January, a sign the impact of its coordinated output cuts may be slowly waning, and cut its forecast for demand for its own crude.
"(It suggests) the rebalancing can't go much further from here and according to the OPEC report, demand for OPEC'S oil must be 33 million barrels per day for the rest of the year to get rid of any remaining oversupply."
OPEC cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline.
Earlier in the day, oil prices got a boost from a broader investor push into commodities after Chinese data showed the world's largest importer of raw materials saw industrial production grow more than expected over the first two months of the year.
The oil price is still showing a 1 percent loss so far this week as concern grows about the ability of OPEC and its partners to counter rapid growth in U.S. crude production, which is tipped to hit a record 11 million bpd before the end of the year.
Rising U.S. output, as well as seasonally low demand, mean U.S. 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.
Seasonal demand patterns for crude and refined products mean the market may only be weeks away from a run of declines.
Weekly U.S. crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday. [EIA/S]
(Reporting by Henning Gloystein; Editing by Tom Hogue and Elaine Hardcastle)