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Oil prices stable on healthy demand, but oversupply looms later in 2018

Oil prices held steady on Thursday, supported by healthy global demand but capped by the relentless rise in US production that is undermining efforts led by producer cartel OPEC to cut supplies and prop up markets. U.S. West Texas Intermediate (WTI) crude futures rose 17 cents, or 0.3 per cent, to $61.13 a barrel by 0245 GMT. Brent crude futures were at $65 per barrel, up 11 cents, or 0.2 per cent.
Reuters technical commodity analyst Wang Tao said market signals for Brent pointed to a continuation of recent sideways movements, although he added that technical chart indicators were “indicating the current sideways move may end very soon.” Prices were receiving support from healthy demand. The Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that oil consumption was expected to grow by 1.62 million barrels per day (bpd) in 2018.
But looming over markets has been a relentless climb in US crude output, which hit another record last week by rising to 10.38 million bpd, up by more than 23 per cent since mid-2016. Commercial crude inventories were up by 5 million barrels, at 430.93 million barrels.
US crude production, which has already overtaken that of top exporter Saudi Arabia, is expected to rise above 11 million bpd later this year, taking the top spot from Russia, according to the International Energy Agency. Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by Middle East dominated OPEC to withhold supplies in order to bolster prices.
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