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Oil prices fall as US output edges higher
[NEW YORK] Crude oil prices fell on Wednesday after the weekly US oil report showed a rise in US crude output, against expectations that producers were pulling back.
US benchmark West Texas Intermediate for July delivery fell US$1.62 to US$59.64 a barrel in New York trade.
In London, Brent crude for July lost US$1.69 to US$63.80 a barrel.
Signs that global output is not falling much despite the crude glut pressured both markets. The Saudi-led Opec cartel, set to meet in Vienna on Friday, has indicated it does not plan to reduce production.
Iran, traders worry, could inject another million barrels a day into the market if it reaches a deal soon on its nuclear programs that would lead to a lift of sanctions.
And the United States is still producing nearly 9.6 million barrels a day, 1.2 million above a year ago, despite the pressure from low prices on high-cost shale oil drillers.
In the week to May 29, US output actually rose by 20,000 barrels a day, the US Energy Department reported Wednesday.
Gene McGillian of Tradition Energy said the US output gain "has kind of reawakened concerns that the fundamental underpinnings of this rally weren't really there. The report showed the gasoline demand also fell."
"With Saudi Arabia keeping its production levels above 10 million barrels a day, Russian levels running 10 mbd, the Iraqis pushing their production above four mbd and the US near a four-decade high, this excess supply, which put prices at a six year low, still hasn't been taken care of," he said.