US oil prices dip on rising crude inventories, record output

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Crude oil prices on Thursday showed a softer outlook with investors concerned about the direction of the global economy, and following only limited support after the latest United States inventory report showed a modest build.

International Brent crude oil futures fell 39 cents, or 0.6 percent, to $62.30 per barrel. Meanwhile, support from the lower trendline around $53.65 should limit any near-term falls.

U.S. West Texas Intermediate (WTI) crude futures fell 70 cents, or 1.27 percent, to settle at $54.56 a barrel.

Both U.S. crude oil imports and exports increased during the week ending February 1, the U.S. Energy Information Administration (EIA) said on Wednesday.

USA distillate stocks fell by 2.3 million barrels, while inventories of other refined fuels dropped by 2.9 million barrels.

Venezuela's opposition is opening a US fund to receive the proceeds of oil sales, a key measure to secure revenue for its effort to dislodge President Nicolas Maduro, an opposition lawmaker said on Wednesday.

From a fundamental perspective, the price is benefiting from data suggesting that supplies from the Organization of the Petroleum Exporting Countries fell by the most in two years last month, with Saudi Arabia leading the way.

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The producers known as OPEC+ started cutting production by 1.2 million barrels per day (bpd) from last month to avert a new supply glut, and OPEC has delivered nearly three-quarters of its pledged cuts already, a Reuters survey showed last week.

Oil prices have been on the rise since the US Treasury announced the seizure of $7 billion in assets of Venezuela's state oil firm PDVSA and its US subsidiary Citgo last week. Later in the year, it expects markets to remain fairly balanced due to a combination of waivers expiring for importers of Iranian oil, and because of a roll-over of the OPEC+ agreement into H2 2019.

USA inventories of winter fuels, including propane, shrank by about 4.9 million barrels combined last week, EIA data showed Wednesday. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies. -China trade dispute have also weighed on the market.

The oil price is showing a 20 percent gain so far this year.

Adding to the bearish sentiment, CNBC reported that a meeting between President Donald Trump and his Chinese counterpart Xi Jinping was "highly unlikely" before the March 1 deadline set by the US for reaching a trade deal.

Trump has vowed to increase US tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent now if the two sides can not reach a deal by March 1.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.

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