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Oil prices drop after U.S. inventories rise

THE LEVANT NEWS — Crude oil prices fell on Wednesday after industry data showed an increase in U.S. stockpiles, and as analysts said that U.S. output had been surprisingly resilient in the face of lower prices.

Benchmark U.S. crude futures CLc1 slipped to a two-week low at $43.55 a barrel in early trading before trimming losses to trade down 59 cents at $43.62 a barrel by 1211 GMT (07:11 a.m. EST).

Brent crude futures LCOc1 were down 34 cents at $47.10 a barrel.

The price drops came on rising stockpiles in North America and slowing economies in Asia.

U.S. crude stocks jumped by 6.3 million barrels in the week to Nov. 6 to 486.1 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday, compared with analyst expectations for an increase of 1 million barrels.

Traders and investors were looking ahead to data from the U.S. Energy Information Administration on Thursday, delayed by a day due to a holiday. A Reuters survey showed stockpiles likely rose for the seventh consecutive week.

“You’re seeing more of a plateau in U.S. production rather than a decline, I’ve been expecting a decline in 2016 but I think the market is in a mode of show us rather than tell us and they’re just not seeing the numbers,” said Michael Hsueh, analyst at Deutsche Bank.

“It’s still looking quite difficult for those that are hoping for or expecting a recovery in prices.”

Hsueh said Deutsche Bank expects global oversupply of around 1 million barrels per day in the first half of 2016.

OPEC member Ecuador’s oil minister said on Wednesday that the only way to balance the market was to cut production and that it aimed to reach an agreement on that at the group’s December meeting.

On the demand side, confidence among Japanese manufacturers fell in November for a third straight month to levels unseen in more than two years, a Reuters poll showed on Wednesday, reflecting fears that a China-led slowdown in overseas demand may have pushed Asia’s second-biggest economy into recession.

“The weakness of global manufacturing activity is … putting pressure on energy demand,” JBC Energy said, adding that it expected a significant drop in oil demand growth in 2016.

In China, factory output grew slower than expected at an annual 5.6 percent in October, data showed on Wednesday, slightly below analyst forecasts of 5.8 percent and down from 5.7 percent in September.

SOURCE: REUTERS

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