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Oil near 6-1/2 year lows as China economy fears linger

Malaysia said it agreed with Indonesia to improve cooperation in the palm oil industry given the grim global economic environment that has stoked worries about demand and pushed down prices.

[SEOUL] Crude oil futures dipped on Wednesday on fears of a hard landing for China's economy despite central bank moves to bolster stumbling growth and concerns about a supply glut.

US stock futures resumed their descent in early Asian trade and Asian shares were seen on the defensive on Wednesday as monetary easing by China's central bank had limited success in cheering up nervous investors.

Brent lost 10 cents to US$43.11 a barrel as of 0110 GMT after it settled up 52 cents at US$43.21 a barrel in the previous session.

US October crude fell 20 cents to US$39.11 a barrel, after finishing the previous session US$1.07 higher at US$39.31.

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ANZ said in a note that China's rate cuts had calmed commodity markets, but they remained cautious and gains would be limited. "The displacement of high cost supply from the United States is taking much longer than expected, and it's likely to keep the market substantially oversupplied in the short term," the bank said.

US crude stocks fell by 7.3 million barrels in the week to Aug 21 to 449.3 million, compared with analysts' expectations for an increase of 1 million barrels as refinery runs increased, data from industry group the American Petroleum Institute showed on Tuesday.

Official inventory data from the US Energy Information Administration is due on Wednesday. "While the rate of global oil stock build is still set to decline, stocks will build for longer than initially anticipated," BNP Paribas said late on Tuesday, "As such, any price improvement will most likely take place from a lower starting point and the pace of any price improvement is likely to be slower than previously assumed." Reuters market analyst for commodities and energy technicals Wang Tao said US oil may retest a support at US$37.91 per barrel.

Iran will ramp up crude oil production and reclaim its lost share of exports shortly after international sanctions on the Opec member are lifted, Iran's oil minister Bijan Zanganeh said on Tuesday.

Nigeria plans to export a total of at least 2.04 million barrels per day (bpd) of crude oil in October, the highest level this year, according to provisional loading programmes.

With oil falling further, support is growing among non-Gulf members for action and even some Gulf officials are concerned about the latest drop in prices. Policymakers in top OPEC producer Saudi Arabia have remained publicly silent.