U.S. crude falls on profit taking, oversupply worries

By Keith Wallis
SINGAPORE, April 13 (Reuters) - U.S. crude futures fell in
early Asian trade on Wednesday as profit taking and concern over
a larger-than-expected build in U.S. crude stocks outweighed
more positive news that Russia and Saudi Arabia had reached
consensus on an oil output cap.
U.S. crude CLc1 fell 46 cents to $41.71 a barrel as of
2318 GMT after settling up $1.81, or 4.48 percent, in the
previous session.
Brent crude LCOc1 had yet to start trading but hit a
four-month high in the previous session, settling up $1.86, or
4.3 percent, at $44.69 a barrel.
"There are two things. There has been a fantastic rise in
prices so I think in the Asian time zone there's been a little
bit of profit taking," said Jonathan Barratt, chief investment
officer at Sydney's Ayers Alliance.
"The second thing is that while we're waiting for more
official inventory data, investors are thinking 'are prices
warranted at these levels'," he said.
Investors are also concerned oil production could rise as
prices move even higher curtailing moves by oil producers,
including Russia and Saudi Arabia, for an oil output cap.
That came as Russia and Saudi Arabia were reported to have
reached a consensus on Tuesday about an oil output freeze, ahead
of an oil producers' meeting in Doha on April 17.
"There's no reason for a freeze when oil is at $50 a barrel.
If oil prices move back to $35 a barrel there'll be rhetoric and
action for an output cap; at $50 a barrel there'll just be
rhetoric," Barratt told Reuters on Wednesday.
That came as U.S. crude stocks rose by a larger than
expected 6.2 million barrels to 536.3 million last week,
according to data from industry group the American Petroleum
Institute.
That compared with analysts' expectations for 1.9 million
barrel increase.
Official data from the U.S. Energy Information
Administration is due out later on Wednesday. EIA/S
U.S. crude production is forecast to fall by 560,000 barrels
per day to 8.04 million barrels in 2017, while U.S. demand would
increase by 190,000 bpd, according to the EIA's short term
energy outlook published on Tuesday.
Global oil demand will climb to 1.16 million barrels per
day, a 10,000 barrel rise compared with earlier estimates, the
EIA said in its monthly forecast on Tuesday.
The agency raised its oil demand growth estimate for 2017 by
120,000 bpd to 1.33 million bpd.