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Oil prices fall on rising US output

A petrol pump. (AFP/Pedro Pardo)
LONDON: Oil prices fell on Thursday after the International Energy Agency (IEA) increased its forecast for US oil output growth in 2018, raising the prospect of excess supply.
Brent crude futures were at $62.03 a barrel at 1201 GMT, down 41 cents, after hitting a session high of $63.14.
US West Texas Intermediate futures fell 30 cents to $56.30 a barrel, down from a high of $56.93.
The Paris-based IEA said US crude output next year would climb by 870,000 barrels per day (bpd), up from its November forecast of 790,000 bpd.
The change mirrors upward revisions issued by the Organization of the Petroleum Exporting Countries and the United States government.
“The IEA underlined the same take that the US Energy Department had the day before yesterday and OPEC had yesterday,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding that further upward revisions for growth could follow.
With cash pouring into the US shale oil industry, the United States is on track to deliver up to 80 percent of the world’s oil production gains through 2025, the IEA estimates.
OPEC revised its estimate for US oil output growth for 2018 to 1.05 million bpd, while the US Energy Information Administration increased its growth forecast to 780,000 bpd.
The IEA expects the oil market to have a surplus of 200,000 bpd in the first half of next year before reverting to a deficit of about 200,000 bpd in the second half. This meant 2018 overall would show “a closely balanced market.”
For now, Brent prices remain underpinned by an outage on the Forties crude pipeline that is expected to last several weeks.
Operator Ineos declared force majeure on crude oil, gas and condensate deliveries from the pipeline, a source familiar with the matter told Reuters on Wednesday.
A fall in US crude inventories last week also lent some support. Stocks fell by 5.1 million barrels in the week to Dec. 8, the fourth consecutive week of decline, to 442.99 million barrels, the lowest since October 2015.

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