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U.S. crude falls 1 percent on concerns over rising output

Reuters  |  NEW YORK 

By Ayenat Mersie

(Reuters) - fell more than 1 percent on concerns over rising U.S. production and as equities fell, erasing earlier gains driven in part by the firing of U.S. Secretary of State

Brent crude futures dropped 31 cents, or 0.5 percent, to settle at $64.64 per barrel. U.S. (WTI) crude futures fell 65 cents, or 1.06 percent, to $60.71 per barrel.

The market has been buffeted by a number of factors in an active session, including weakness in the equity market, which has trended in tandem with of late.

U.S. production has reached an all-time record and weekly data last week showed overall output rising further, to more than 10.3 million barrels per day.

U.S. crude production from major shale formations was expected to rise in April to a record 6.95 million bpd, the (EIA) said on Monday.

"There's no stopping us and OPEC's frustration levels are going to grow," said Philip Streible, at in Chicago, referring to efforts by major producers to curb output since last year.

Tillerson's firing increases risks to the multilateral agreement to limit Iran's nuclear capabilities, raising questions about potential effects on output by the third largest producer in the Organization of the Petroleum Exporting Countries.

CIA is the pick to replace Tillerson; he has called for the 2015 nuclear deal to be scrapped.

Trump has threatened to withdraw from the accord between and six world powers unless and European allies "fix" it with a follow-up pact.

"The market is having a wobble on the back of the potential impact on future supply from and also for the ramifications for the as a whole," Ole Hansen, at Saxo Bank, said.

Concerns about supply have had an effect in the forward curve in the futures market, where the May contract has outperformed April, putting May's price higher than April's, known as "contango."

When the front-month contract is trading at a lower level than a later-dated contract, it suggests emerging concerns about growing supply, and reduced need to buy now.

"The market switched from backwardation to contango in the curve today... that's a situation that implies weakness; it's a situation that, if it persists, will lead to an increase in storage," said Bob Yawger, of at Mizuho in

Data from the will be released at 4:30 p.m. on Tuesday, and is expected to show a build U.S. crude inventories for the third straight week.

(Additional reporting by in LONDON, Henning Gloystein in SINGAPORE; Editing by and Diane Craft)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 14 2018. 00:55 IST