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Oil steadies but threat of higher supply curbs gains

Reuters  |  LONDON 

By Cooper

LONDON (Reuters) - Oil prices steadied on Thursday, but were likely to remain under pressure from evidence of rising U.S. output and uncertainty over the outlook for supply before a key meeting next week of the world's largest exporters.

Brent crude futures were last up 6 cents at $76.80 a barrel by 0915 GMT, while U.S. Intermediate (WTI) crude futures were up 12 cents at $66.76 a barrel.

"At OPEC's meeting in a good week's time, apparently plans to make several proposals that all boil down to increasing production on a one-off or gradual basis by between 500,000 and 1 million barrels per day," analysts said in a note.

"has already signalled that it will resist any such attempts and blames the U.S. for the price rise. According to sources close to OPEC, and are also not in favour of raising production."

The Organization of the Petroleum Exporting Countries meets on June 22 in to discuss its own supply policy and then again on June 23 with rival producers such as and

For the last month, the has successively marked lower intraday highs and lows, indicating that traders and investors are not quite as confident in the outlook for the supply/demand balance, especially given the steep rise in U.S. crude production and the splintering within OPEC.

U.S. crude output has risen almost 30 percent in the last two years to 10.9 million bpd, and is now close to top Russia, which churned out 11.1 million bpd in the first two weeks of June, and above top exporter Saudi Arabia, which produced slightly more than 10 million bpd.

But the rising output was met by strong demand, which traders said prevented prices from falling further.

U.S. consumption of gasoline rose to a record 9.88 million bpd last week, according to the EIA.

U.S. crude inventories fell by 4.1 million barrels, to 432.4 million barrels.

MEET

The surge in U.S. output puts pressure on other producers, which are losing market share.

Russian and Saudi production has been held back voluntarily since 2017, when OPEC, together with non-OPEC producers, started supply cuts of 1.8 million bpd to prop up prices.

With Brent prices up by around 180 percent from their 2016 lows and demand strong, OPEC and may soon end their voluntary supply cuts.

OPEC's effective and will also have the chance to talk before the meeting.

Russia and are set to open tournament, which starts in Russia on Thursday.

"The topic will surely come up between (Vladimir) and the Saudi as they watch their countries' teams in today's opening game of together in Moscow's Luzhniki stadium," said.

(Reporting by Cooper; Editing by Adrian Croft)

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

First Published: Thu, June 14 2018. 15:20 IST
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