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Oil set for third weekly drop as rising US output blunts cuts
[SINGAPORE] Oil headed for a third weekly drop as US crude output rose to a two-year high and Chinese refining slowed, signs that the world's two biggest consumers may stymie Opec-led efforts to trim a global glut.
Futures were little changed in New York, down 3.5 per cent for the week. US production had the biggest weekly advance since June, according to Energy Information Administration data on Wednesday, offsetting the largest decline in stockpiles since September.
Oil processing in China fell by the most in three years in July, figures from the National Bureau of Statistics showed Monday.
Oil this month has fluctuated in the tightest range since February as production cuts by the Organization of Petroleum Exporting Countries and its allies drain a surplus slower than expected.
Brent crude prices will struggle to climb above US$60 a barrel during the next five years because of plentiful supplies from both Opec and US shale, according to Citigroup.
"Inventories are dropping pretty nicely, but as far as the future is concerned, the balancing job gets harder with output increasing more than people think," said Ric Spooner, an analyst at CMC Markets in Sydney.
"We might just see the market begin to pause between here and mid-US$44 and US$47."
West Texas Intermediate for September delivery was at US$47.10 a barrel on the New York Mercantile Exchange, up one US cent, at 7.59am in London.
Total volume traded was about 29 per cent below the 100-day average. Prices rose 31 US cents, or 0.7 per cent, to US$47.09 on Thursday, the first gain in four sessions.
Brent for October settlement fell two US cents to US$51.01 a barrel on the London-based ICE Futures Europe exchange.
The contract on Thursday advanced 76 US cents, or 1.5 per cent, to US$51.03 a barrel. Prices are down 2.1 per cent this week. The global benchmark crude traded at a premium of US$3.81 to WTI.
US crude output rose by 79,000 barrels a day to 9.5 million a day last week, the highest since July 2015, the Energy Information Administration reported Wednesday. Stockpiles declined for a seventh week to 466.5 million barrels.