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Oil falls; rising U.S. inventories limit the growth

Oil prices rose on Monday in quiet trade after prices declined last week and reached seven-month lows, but gains were limited by increasing crude oil supply in the United States and other countries.

27.Jun.17 3:40 AM
By Daria Zaytseva


Oil falls; rising U.S. inventories limit the growth

Brent crude futures were up 25 cents, or half a percent, at $45.79 a barrel by 1:13 p.m., still set for a near 20 percent drop in the first half of the year. U.S. crude futures were up 35 cents, or 0.8 percent, at $43.36 a barrel.

The Organization of the Petroleum Exporting Countries and its partners have been trying to reduce a global crude excess with production cuts. OPEC states and 11 other exporters agreed in May to extend cuts of 1.8 million barrels per day until March.

However, Nigeria and Libya, OPEC members exempt from the cuts, have raised output. Iran was allowed a small increase to recover market share lost under Western sanctions. It said its production has exceeded 3.8 million bpd and is expected to reach 4 million bpd by March.

Also, U.S. shale oil output is up around 10 percent since last year. The number of U.S. oil rigs in operation has hit its highest in over three years.

Gene McGillian, manager of market research at Tradition Energy in Stamford, said that U.S. production could jump to 10 or to 10.5 million barrels a day by the end of the year, and when they added Libya, Nigeria and North Sea production that would negate the Saudi-led cuts.

Merrill Lynch, analysts at Bank of America, said demand had not grown quickly enough to reduce the volume of production.

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