Oil Lower On Supply Glut Fears As Output Rises

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London: Oil fell on Tuesday, as rising output from the Middle East and North Sea renewed concerns about a global supply overhang.

Brent crude futures were trading 37 cents lower at $45.46 per barrel at 0919 GMT (2:49 p.m. in India), retreating from earlier gains.

US crude futures were also down 37 cents at $44.41 per barrel.

Iraq said its oil shipments from southern fields averaged 3.364 million barrels per day (bpd) in April, up from 3.286 million in March.

Production from top exporter Saudi Arabia was 10.15 million bpd in April, but sources said it may return to near-records of 10.5 million bpd soon.

Iran is also raising output following an end to sanctions in January, having increased its exports to almost 2 million bpd from a little over 1 million bpd at the start of the year.

Daily supply of North Sea Brent crude oil, which contributes to the futures benchmark, will rise in June to its highest in four months, up 17 per cent from May, according to monthly loading programmes provided by trading sources.

“There are enough supply stories out there to slow or temper any gains,” Richard Mallinson, analyst at Energy Aspects said, though he added lower supply from the United States should be supportive to prices in the longer term.

US production has slumped from a peak of around 9.6 million bpd in June 2015 to below 9 million bpd now, according to government data.

This helped lift crude by nearly 70 per cent from decade lows hit in early 2016.

Demand worries also returned to the horizon after China’s factory activity shrank for a 14th straight month in April.