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Oil slips after U.S. output hits a new record, stocks rise

Reuters  |  NEW YORK 

By David Gaffen

NEW YORK (Reuters) - Oil prices fell on Wednesday, continuing their recent slide after surging U.S. crude output hit another record and domestic inventories rose more than expected.

In early trade, prices had risen after a report that and are discussing whether to cut crude output next year. Then the reported that domestic crude inventories rose 5.8 million barrels in the latest week, more than double analysts' expectations.

Crude output hit 11.6 million bpd, a weekly record, though analysts will watch to see if monthly data confirms that.

U.S. crude futures fell 65 cents to $61.57 a barrel as of 11:17 a.m. EST (1617 GMT). That is down nearly 20 percent from a peak close of $76.41 a barrel in early October.

"The market has yet to prove that it can hold onto a rally, so the short-term mood is still very negative," said Phil Flynn, at in

Brent crude, the global benchmark, fell 49 cents to $71.64 a barrel.

While Iranian are expected to fall after U.S. sanctions took effect on Monday, reports from OPEC and other forecasters have indicated the global could have a surplus in 2019 as demand slows.

and Saudi Arabia, the top producers in an OPEC-led alliance, started bilateral talks on a return to production cuts next year, Russia's agency reported, citing an unnamed source. In June, the producer group decided to relax output curbs in place since 2017, after pressure from U.S.

Analysts said those countries may be more willing to cut output now that the U.S. midterm elections are over. Trump, whose was fighting to retain control of congress, had complained of higher gasoline prices.

"OPEC was feeling the Trump pressure but producers took action with the thinking that they just needed to get past the U.S. election," said Joe McMonigle, at in Washington, in a note Wednesday. "We expect to start hearing public comments from OPEC ministers this weekend" about pulling back on the recent production boost.

A ministerial committee composed of some members of the Organization of the Petroleum Exporting Countries and allies meets on Sunday in to discuss the outlook for 2019.

Supply from countries such as has risen sharply since June. Also, granted waivers from its sanctions on to eight of that major supplier.

(Additional reporting by Henning Gloystein; Editing by and David Gregorio)

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

First Published: Wed, November 07 2018. 22:31 IST