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Oil prices drop as supplies increase

Reuters  |  LONDON 

By Christopher Johnson

LONDON (Reuters) - prices fell on Wednesday, hit by rising supplies in the and expectations that group could relax voluntary output cuts.

Benchmark Brent crude was down 30 cents at $75.58 a barrel by 0910 GMT. U.S. light crude was 20 cents lower at $66.16.

The Organization of the Petroleum Exporting Countries and some non-producers, including Russia, started withholding output in 2017 to reduce a global supply overhang and prices have risen by around 60 percent over the last year.

But the outlook for the market in the second half of this year is uncertain, analysts say, and argues there are downside risks to global demand.

OPEC and other producers will meet on June 22-23 in to discuss future production policy.

"More from OPEC+ is the base case," said Bjarne Schieldrop, chief commodities at Swedish

"and have already started to lift production," he said. "Unofficial sources have said that will propose to return production back to the October 2016 (level), i.e. removing the cap altogether over a period of three months."

Lukman Otunuga, at futures brokerage FXTM, said and forecasts of more to come were undermining prices.

"The prospect of easing supply curbs from OPEC-led producers continues to be reflected in oil's overall depressed price," Otunuga said.

In the United States, the said on Tuesday that rose by 830,000 barrels in the week to June 8, to 433.7 million.

Rising U.S. stocks partly reflect a surge in U.S. crude production, which has jumped by almost a third in the last two years to a record 10.8 million barrels per day (bpd).

With output in rising back above 11 million bpd in June and Saudi production climbing to more than 10 million bpd, supplies from the top three producers are increasing.

"With rising production from U.S. shale adding to oil's woes and reviving oversupply concerns, further downside could be a possibility in the short to medium term," Otunuga said.

and inventory data is due to be published on Wednesday by the

(Additional reporting by in Singapore; Editing by and Dale Hudson)

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

First Published: Wed, June 13 2018. 15:32 IST