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Oil prices dipped early on Friday and were not far off six-months lows as an ongoing supply overhang weighed on markets despite an OPEC-led effort to cut production and prop up prices.
Brent crude futures were down 6 cents, or 0.1 per cent, at $46.86 per barrel at 0045 GMT.
US West Texas Intermediate (WTI) crude futures were down 8 cents, or 0.2 per cent, at $44.38 per barrel.
Prices for both benchmarks are down by more than 13 percent since late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended a pledge to cut production by 1.8 million barrels per day (bpd) by an extra nine months until the end of the first quarter of 2018.
The price falls are due to ongoing high supplies despite the pledge to cut from within OPEC, and also because of rising output from the United States.
“Oil production in the US was … higher (and) oil tanker tracker data also suggests OPEC shipments remain strong,” ANZ bank said.
High exports and production from other countries, including Russia and the United States, are also contributing to the ongoing glut.
Top producer Russia, not an OPEC-member but participating in the deal, is expected to export 61.2 million tonnes of oil in the third quarter (around 5 million bpd), against 60.5 million tonnes in the second quarter, via pipelines, according to industry sources and Reuters calculations. Add in Russia’s tanker shipments and its total exports are likely above nine million bpd.
In the United States, which is not participating in any deal to hold back production, oil output <C-OUT-T-EIA> has risen over 10 percent over the past year to 9.3 million bpd, and the Energy Information Administration (EIA) expects that figure to rise above 10 million bpd in 2018.
In a sign of the ongoing supply overhang, traders are increasingly hiring tankers again to store unsold crude, waiting to sell later at a higher price