Oil falls for second day as rising U.S. output saps demand

First Time in 50 Years: US Oil Production to Hit 10 Million Barrels a Day

First Time in 50 Years: US Oil Production to Hit 10 Million Barrels a Day

A strengthening US dollar and rising USA crude production are said to be the factors that caused West Texas Intermediate on Monday to settle down 58 cents to $65.43 per barrel and Brent to drop $1.21 to $69.31 per barrel.

The output cut endeavor and the massive effort on keeping oil inventories at bay are both looking to propel the oil prices to great feats this month, even this year. Still, oil's recent surge is making more production in the USA and elsewhere profitable, which in turn will push supply even higher.

U.S. West Texas Intermediate crude futures were 13 cents, or 0.2 percent, lower at $65.43 at 0027 GMT. Prices headed for their biggest decline since December 12. Nymex West Texas Intermediate, the USA benchmark, fell 0.7% to $65.09 a barrel.

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See also: Can Oil Stay Above $70? The global benchmark crude traded at a premium of $4.11 to WTI, after reaching the smallest premium since August on Monday. The contract for March delivery settled down $1.06, or 1.5 percent, at $69.46 a barrel on Monday.

Brent, the global oil benchmark, slid 0.46% to $68.88 a barrel on Tuesday morning in London as the USA dollar continued its rally.

If confirmed by American Petroleum Institute and US Energy Information Administration data released later Tuesday and Wednesday respectively, this would end the long-running decline in US crude stocks which has seen them drop by 47.4 million barrels over a 10-week period to 411.58 million, the lowest level since February 2015. Stockpiles fell to 411.6 million barrels through the week ended January 19, the lowest level since February 2015.

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The data followed a first estimate on fourth quarter gross domestic product in the United States, although the 2.5 percent annualized rate is below the 3.2 percent for the third quarter it represents a continuation of steady growth.

That said, the recovery in oil prices over the a year ago has allowed the U.S. shale producers to reinstate their shale oil production, which had become non-profitable due to extremely low oil prices. Yet, with the US benchmark around $65 a barrel, the number of rigs drilling for crude in American fields is on the upswing.

The dollar continues to sink further on the market today; it has been one of the integral parts on the upbeat oil prices today, the dollar managed to drop a total of 3.2% against major currencies this month alone.

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