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July 13, 2016

Oil prices rise but oversupply concerns remain

Oil prices have increased from sharp losses, yet brokers warned that the downtrend may resume soon as high-production and concerns over weak economic growth reduced sentiment.

By Srivani Venna

Oil prices have increased from sharp losses, yet brokers warned that the downtrend may resume soon as high-production and concerns over weak economic growth reduced sentiment.

Brent crude oil rose 50 cents at $46.76 a barrel, while the US crude edged-up 60 cents at $45.35, Reuters reported.

Tamas Varga from PVM Oil Associates told the news agency: "The oil market is oversupplied, OPEC production is on the rise and we had a rather bearish weekly US oil stats report."

"OPEC production is on the rise and we had a rather bearish weekly US oil stats report."

Data released by the Energy Information Administration (EIA) highlighted a fall in US crude inventories last week, while distillate inventories and gasoline stocks increased.

The agency said that even due to demand growth and cut in non-OPEC output, the persistent oversupply glut may hit crude prices.

Due to surging crude stocks, floating storage has continued to increase, the IEA noted.

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Crude oil production for last month averaged 8.6 million bpd, which is 200,000bpd below the May level, and almost 1.1 million bpd below the 9.7 million bpd level reached in April last year.

Last week, crude stocks declined 2.5 million barrels, which is less than a three million barrel drop forecast in a Reuters poll.

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