Oil prices decline on rising U.S. stockpile

Oil rises amidst expected extension of OPEC cuts

Prices were still on track for their first weekly loss in six as rising US output data was compounded by doubts that Russian Federation would support an OPEC deal.

Rising crude output, meanwhile, continued as preliminary US production figures showed weekly output rose by 25,000 to an all-time high of 9.65 million barrels per day, the EIA said.

The Energy Information Administration is out with the government's numbers this morning.

Early yesterday, Brent crude, the worldwide benchmark dropped to $61 from the $64 recorded on November 7.

Inventories of rose by roughly 1.9 million barrels for the week ended November 11, missing expectations of a draw of 2.2 barrels.

The West Texas Intermediate for December delivery was down 0.37 US dollar to settle at 55.33 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery lost 0.34 dollar to close at 61.87 dollars a barrel on the London ICE Futures Exchange. The American Petroleum Institute on Tuesday had reported a 6.5 million-barrel climb, according to sources.

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"After all, the need to further extend the agreement shows that the strategy is not working", commodity researchers at Commerzbank said, adding that the "key factor" was rising US shale oil output. The median estimate in a Bloomberg survey had forecast a 2.4 million barrel decline.

Crude oil prices edged up in Asia on Thursday as investors saw a recent sell-off overdone and continued to monitor declining production from OPEC member Venezuela as it reels from a debt and inflation crisis.

This is potentially bearish for crude oil especially Brent.

Demand prospects have also dimmed this week, further weighing on the market. Prices trended higher after Saudi Arabia's energy minister on Thursday signaled a willingness to extend output cuts when OPEC meets on November 30 on whether to extend caps well into 2018."Obviously, the comments gave us guarantee that the extension is going to happen and was a driving story overnight", said Phil Flynn, an analyst at Price Futures Group in Chicago."Globally, we're coming against the backdrop of tightness in distillate inventories and strong global refinery demand".

Distillate stockpiles, which include diesel and heating oil, fell by 799,000 barrels, versus expectations for a 1.3 million-barrel drop, the EIA data showed.

Despite the three day consolidation, I think there is enough downside momentum to drive January WTI crude oil into its value zone at $54.62 to $53.78 and February Brent into $60.36 to $59.40. Refinery utilization rates rose by 1.4 percentage points.

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