Oil prices stable after two-day decline, but rising U.S. output drags

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SINGAPORE (Reuters) – Oil prices stabilised early on Wednesday after posting two days of falls at the start of the week.

Support on Wednesday came from a report that U.S. crude inventories are not rising as much as expected during the spring season that is starting, implying healthy demand.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.86 a barrel at 0033 GMT, up 15 cents, or 0.25 percent, from their previous close.

Brent crude futures LCOc1 were at $64.70 per barrel, up 6 cents, or 0.1 percent.

U.S. crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday. That compared with analysts’ expectations for an increase of 2 million barrels.

Refinery crude runs rose by 85,000 barrels per day (bpd), API data showed.

Despite this, general market conditions remain weak, and crude prices have not managed to return to their early 2018 highs of over $70 per barrel for Brent and almost $67 a barrel for WTI.

“The ever-expanding U.S. supply continues to pose significant downside risk to oil prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

U.S. crude oil production C-OUT-T-EIA has risen by almost a quarter since mid-2016 and output soared past 10 million bpd in late 2017, overtaking production by top exporter Saudi Arabia.

U.S. crude production, pushed up largely by shale oil drilling, is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (IEA).

Official weekly U.S. crude oil production and inventory figures are due to be published by the Energy Information Administration (EIA) later on Wednesday.

Outside the United States, Libya’s Zawiya oil terminal returned to normal operations late on Tuesday after workers who were blocking ships from docking agreed to end a one-day strike, two sources said.

Zawiya exports crude from Libya’s giant El Sharara oilfield, which produces 300,000 bpd, more than a quarter of the North African country’s output.

(GRAPHIC: Russia vs Saudi vs U.S. oil production – reut.rs/2FrFVMF)

Reporting by Henning Gloystein; Editing by Joseph Radford

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