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Oil falls as oversupply concerns return to centre stage
[LONDON] Oil prices eased on Friday as focus returned to oversupply as production from Nigeria and Canada revived and OPEC production reaching a record high in June.
Despite Friday's losses, oil prices were on track for the first weekly gain in three weeks after a bullish run this week on strong buying following Britain's vote in favour of leaving the European Union.
Global benchmark Brent crude futures were down 30 cents at US$49.41 a barrel at 0940 GMT.
US West Texas Intermediate (WTI) crude was trading at US$48.08, down 25 cents day on day.
"Oil has settled down after the initial short covering squeeze earlier in the week," said Ole Hansen, commodity strategist at Saxo Bank in Copenhagen.
"A rising contango indicates that the market is getting ready to absorb returning supply from Nigeria and Canada."
Militant attacks in Nigeria had brought production to the lowest in 30 years but no new attacks have been carried out since June 16, allowing production to slowly ramp up.
In Canada, oil sands output was also gradually increasing after wildfires had curtailed production. As of Wednesday, around 400,000 barrels per day of production were still affected in the Fort McMurray area.
Adding to oversupply concerns, a Reuters survey showed OPEC production rose to a record high in June. Stronger supply from major Middle East producers, except Iraq, underlined their focus on maintaining market share.
Despite growing signs of lingering oversupply, US Energy Secretary Ernest Moniz said on Friday he expected oil supply and demand to balance by 2017.