Oil prices steady but still under pressure from rising U.S. output

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US crude stocks rose less than expected last week while inventories at the key Cushing, Oklahoma storage hub fell for an 11th straight week, according to data released by the Energy Information Administration on Wednesday.

Brent crude futures were down 3c at $64.31 a barrel by 10.05am GMT.

Brent futures slipped 32 cents to $64.47 a barrel by 1232 GMT, while US crude futures fell 33 cents to $62.27, although both contracts had eased off their lows in line with a recovery in S&P futures. The S&P 500 index was last down 0.77 per cent.

"Crude is. under pressure from rising US production, which hit a new high last week, now firmly above Saudi Arabia's production level", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

The continued growth of US shale has been a theme at the CERAWeek conference in Houston this week, said John Kilduff, partner at investment manager Again Capital in NY. Prices of commodities stayed under pressure.

Meanwhile, a heavyweight from the shale oil and gas industry has warned against too much optimism about the future of USA oil.

"Strong shale output growth challenges the market tightening narrative in the medium term", he added.

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EIA estimated that US crude oil production averaged 10.3 million barrels per day in February, which is an increase of 230,000 barrels per day from the January level, when there were some well freeze-offs in the Permian and Bakken fields. According to IEA's new report titled Oil 2018, "global oil trade routes are moving East, as China and India replace the United States as top oil importers".

"The build was much less than the 5.66 million barrel build that the API had reported last night, which may have spooked the market a bit", said Nick Holmes, an analyst at Tortoise in Leawood, Kansas, which manages $16 billion in energy-related assets.

Rising U.S. output, which reached 10.37 million bpd last week, remains a focus for investors.

Reuters commodities columnist Clyde Russell said imports in January and February combined gave a daily rate of 9.02 million bpd, up 10.8 per cent from the same period a year ago.

"Crude is. under pressure from rising USA production which hit a new high last week, now firmly above Saudi Arabia's production level", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

The EIA said on Tuesday it expects United States crude output in the fourth quarter of 2018 to reach an average of 11.17 million bpd, up from the previous forecast a month ago of 11.04 million bpd.

With US output outpacing demand growth, analysts say the Organisation of the Petroleum Exporting Countries (Opec) and Russian Federation, who together with some other producers have been withholding production in order to prop up prices, are under pressure to keep up the supply restraint, even at the cost of market share.

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