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Oil holds losses at below $62 as US production surges to record

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Oil held losses below $62 a barrel after US crude production surged to a record, raising concern global supplies will swamp demand.

Futures were little changed in New York after sliding 2.5 per cent on Wednesday, the biggest drop in two months. US crude production jumped to a record 10.25 million barrels a day last week, the most in Energy Information Administration data going back to 1983. American crude in storage increased by 1.9 million barrels.

The US has been the largest counterbalance to efforts by the Organisation of Petroleum Exporting Countries to cut global supply, with the nation’s output now eclipsing Saudi Arabia’s. Earlier this week, the US government forecast production rising above 11 million barrels a day this November, which would exceed top world producer Russia’s current level.

“The market is strongly reacting to the higher-than-expected surge in US oil production, which has depressed investor sentiment,” Kim Kwangrae, a commodities analyst at Samsung Futures, said by phone from Seoul. “Now inventories are rising again, more eyes are on US production data” for signs on if the global supply glut may worsen.

West Texas Intermediate for March delivery traded at $61.70 on the New York Mercantile Exchange, down 9 cents at 8.58am in Tokyo. The contract dropped $1.60, or 2.5 per cent, to settle at $61.79 on Wednesday, the biggest decline since January 8th. Total volume traded was about 43 per cent below the 100-day average.

Brent for April settlement declined $1.35 to close at $65.51 a barrel on the London-based ICE Futures Europe exchange on Wednesday. The global benchmark ended the session at a premium of $3.96 to April WTI. – Bloomberg

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