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Oil, briefly up on lower rig counts, falls on U.S. output outlook

Reuters  |  LONDON 

By Nasralla

LONDON (Reuters) - prices fell on Monday on expectations that U.S. output will rise this year, erasing earlier gains buoyed by lower weekly U.S. rig counts and falling U.S. unemployment.

Brent crude futures were at $64.04 per barrel at 1353 GMT, down 45 cents from their previous close.

U.S. Intermediate (WTI) crude futures were down 54 cents to $61.50 a barrel.

Helping the dip, hedge funds and money managers cut their bullish wagers on U.S. for the first time in three weeks, data showed on Friday.

The reduction came as gross short positions on the climbed to their highest level in nearly a month.

"Rising production and inventory in the has been reducing fund sentiment since it peaked at the end of January," ING said in a note.

Crude prices had risen on Friday and earlier on Monday after the U.S. added the biggest number of jobs in more than 1-1/2 years in February.

In markets, U.S. cut rigs for the first time in almost two months, with drillers cutting back four rigs, to 796, firm said on Friday.

Despite the lower rig count, which is an early indicator of future output, activity remains much higher than a year ago. Then, 617 rigs were active, and most analysts expect U.S. production, which has already risen by over a fifth since mid-2016 to 10.37 million barrels per day (bpd), to expand further.

"Permian and Bakken shale basins still saw active rigs rising by 2 and 3 last week, respectively, and are likely to keep U.S. production on (an) increasing trend," ING said.

The has become the world's no. 2 producer, ahead of top exporter Only pumps more, at nearly 11 million bpd.

"Our view is still that we have more downside prices ahead of us in the short term," SEB said in a note.

The Organization of the Petroleum Exporting Countries (OPEC), together with other producers, has been limiting production since the start of 2017 to prop up prices.

It is not clear when the deal to restrain output will end, but Iranian minister said OPEC could agree in June to begin easing current production curbs in 2019, reported.

(Additional reporting by Henning Gloystein; editing by and Jason Neely)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, March 12 2018. 19:44 IST