Oil Markets Calm As Data Shows Smaller Inventory Build-Up (USO)

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Twelve analysts polled ahead of inventory reports from industry group American Petroleum Institute (API) and the U.S. Energy Department's Energy Information Administration (EIA) estimated, on average, that crude stocks were seen rising 2 million barrels in the week ended March 9.

But on the positive side for oil prices, consumers soaked up large amounts of fuel.

Oil prices extended falls from the previous two days on Wednesday as soaring USA production outweighed strong China data that makes more imports by the world's biggest crude buyer likely, Reuters reports.

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"The ever-expanding US supply continues to pose significant downside risk to oil prices", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. Gasoline futures surged 1% as stockpiles sank the most since September.

Brent crude rose 29 cents to $64.93 a barrel at 1156 GMT, climbing from an earlier low of $64.43, while U.S. West Texas Intermediate (WTI) futures rose 46 cents to $61.17. Diesel futures rose 1.32 cents, or 0.7%, to $1.8871 a gallon.

Oil prices have firmed since OPEC's November 2016 agreement to cut oil production by 1.2 million barrels per day (bpd), while non-OPEC members, led by Russian Federation, agreed to cut production by 558,000 bpd.

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The oil market continued to be caught between rising US output and efforts by the Organization of the Petroleum Exporting Countries and other major producers to cut output. Output has been helped by the 25% rise in oil prices over the past year, along with improvements in efficiency and technology.

"Meanwhile, the EIA confirmed, or possibly made worse, what we already knew about USA shale output, which is relentlessly marching higher".

China on Wednesday reported January-February domestic oil production down by 1.9 percent on the year to 30.37 million tonnes, equivalent to 3.77 million bpd. But the group said total global oil supply rose last month, in a sign that USA shale production is undermining Saudi efforts to rebalance the market. "Nevertheless, even with crude prices at the higher end of the new $45-$65 range in early 2018, we expect prices to stay within this range over the medium term amid better balance between increased production and growth in demand", he said. When near-term prices are lower than prices further out, it can make it profitable to store oil for the future, which can be a sign of oversupply and can allow a buildup in storage.

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-Summer Said and Christopher Alessi contributed to this article.

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