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Oil slips under US$57 as IEA sees bigger glut
[LONDON] Brent crude oil fell below US$57 a barrel on Friday after the International Energy Agency said a global oil glut was building and US oil production showed no signs of slowing.
Brent for April was down 50 cents at US$56.58 by 1040 GMT. US crude was down 35 cents at US$46.70.
"US supply so far shows precious little sign of slowing down," the IEA said in its monthly oil market report. "Quite to the contrary, it continues to defy expectations."
"The unwinding of seasonal refinery maintenance may slow US crude stock builds in 2Q15 but will not stop them, and stocks may soon test storage capacity limits. That would inevitably lead to renewed price weakness," the agency said.
Global supply was up 1.3 million barrels per day (bpd) year-on-year at an estimated 94 million bpd in February, led by a 1.4 million bpd increase from non-Opec producers, the IEA said.
It saw world oil demand this year at 93.50 million bpd.
"The market will be more balanced in the second half, but there is still a massive oversupply in the first half," said Barbara Lambrecht, analyst at Commerzbank in Frankfurt.
"We still expect oil prices to fall in the coming weeks due to rising inventories," she added.
News of a deal to end a strike by US refinery workers helped support oil as it could help to increase demand for crude oil for processing in the world's biggest oil consumer.
The strike, the largest walkout by US refinery workers in 35 years, has affected around a fifth of the oil processing capacity in the United States, limiting throughput.
The deal could reduce US crude stockpiles, which climbed last week to the highest level for this time of year in more than 80 years.
At last count, US crude stocks stood at a record 468 million barrels, the IEA said in its report on Friday.
"A significant recovery can only be seen if US crude production starts to be affected by the lower oil prices," said Hans van Cleef, energy economist at ABN AMRO. "But it will take six to nine months before production shows an impact."
Investors kept an eye on developments in Libya, where three-quarters of oil production has been kept off line by fighting between rival militias.