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Oil slips as USA output offsets OPEC curbs

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Reuters

"The inventory levels are coming down, in the US too", Again's Kilduff said.

Exports of US crude jumped to just above 2 million bpd, close to a record 2.1 million hit in October.

A stronger dollar puts pressure on dollar-denominated commodities like oil.

The premium of Brent over WTI widened to nearly $3.60/Bbl, having neared its narrowest point in six months on Tuesday, as concern about a bottleneck of Canadian crude imports underpinned USA futures.

The U.S. West Texas Intermediate then was down by to trade at as low as $61 per barrel from previously trading closer to $70 while Brent crude futures were down to trade at $65 per barrel slipping down by more than 2%.

The correlation between moves in the oil price and the dollar has strengthened in the last couple of weeks, as investors increasingly sell other assets to buy the United States currency on expectations of a faster pace of rate rises.

Since the dollar began to grind higher a few weeks ago, the oil price has lost almost 10% since hitting a multi-year high above $70 in January. Inventories in US tanks and terminals likely increased by 3 million barrels last week, potentially marking the fourth straight week of gains and the longest expansion since the first quarter of 2017, Bloomberg reports.

In the middle of rising inventory reports from the U.S. Energy Information Administration and the American Petroleum Institute, the two agencies have reported a draw in the production for the week that ended in February 16.

U.S. crude oil production was virtually unchanged last week at 10.27 million bpd, close to the levels of top producer Russian Federation and more than Saudi Arabia, the world's biggest oil exporter, now pumps. The worry is oil undersupply, not oversupply, United Arab Emirates Energy Minister Suhail Al Mazrouei said at the International Petroleum Week conference in London.

Crude inventories had been forecast to rise 1.8 million barrels, as stocks seasonally increase when refineries cut intake to conduct maintenance. The four-week moving average of 8.1 million bpd is 5 percent less than the same period from 2017.

The correlation between moves in the oil price and the dollar has strengthened in the last couple of weeks, as investors increasingly sell other assets to buy the US currency on expectations of a faster pace of rate rises.

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