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Oil prices fall on dip in China demand, surging U.S. output

Reuters  |  SINGAPORE/LONDON 

By Gloystein and Dmitry Zhdannikov

SINGAPORE/LONDON (Reuters) - prices fell on Friday, as weakening demand in and surging U.S. output weighed on markets despite supply woes in and as well as OPEC's production cuts.

Brent crude futures were at $76.60 per barrel at 1015 GMT, down 72 cents, or 0.9 percent. U.S. Intermediate (WTI) crude futures were down 39 cents, or 0.6 percent, at $65.56.

China's May imports eased away from a record high hit the month before, customs data showed on Friday, with state-run refineries entering planned maintenance.

May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April.

Further weighing on prices has been surging U.S. output, which hit another record last week at 10.8 million bpd.

That's a 28 percent gain in two years. It puts the close to becoming the world's biggest crude producer, edging nearer to the 11 million bpd churned out by

The surge in U.S. production has pulled down WTI into a discount versus Brent of more than $11 per barrel, its steepest since 2015.

"This is occurring because of the rapid increase in production from U.S. shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russia," said William O'Loughlin, at Australia's

MARKET STILL TIGHT

Despite Friday's falls, Brent remains more than 15 percent above its level at the start of the year.

U.S. Jefferies said the "crude market is tight and spare capacity could dwindle to 2 percent of demand in 2H18, its lowest level since at least 1984".

Markets have been tightened by supply trouble in Venezuela, where state-owned firm is struggling to clear a backlog of around 24 million barrels of crude waiting to be shipped to customers.

More generally, Brent has been pushed up by voluntary production cuts led by the Organization of the Petroleum Exporting Countries and Russia, which were put in place in 2017.

OPEC and meet on June 22/23 to discuss production policy.

On Friday, OPEC's third-largest criticised a U.S. request that Arabia pump more oil to cover a drop in Iranian exports and predicted OPEC would not heed the appeal.

"It's crazy and astonishing to see instruction coming from to to act and replace a shortfall of Iran's export due to their Illegal sanction on and Venezuela," Iran's OPEC governor, Hossein Kazempour Ardebili, told

(Editing by Dale Hudson)

(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: Fri, June 08 2018. 16:08 IST
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