Oil stable on strong China data, but rising US output caps gains

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UPDATE 3-Oil stable on strong China data, but rising US output caps gains

* Strong China data lends crude oil some support

* Lower-than-expected U.S. crude stock rise adds to support

* But relentless U.S. output climb still weighs

* Oil markets expect slight oversupply for most of 2018 (Adds Goldman Sachs comment, updates prices)

By Henning Gloystein

SINGAPORE, March 14 (Reuters) - Oil prices were stable onWednesday after posting two days of declines at the start of theweek.

Support came from a report that U.S. crude inventories arenot rising as much as expected during the spring season nowstarting, implying healthy demand, and from strong China data.

U.S. West Texas Intermediate (WTI) crude futures CLc1 wereat $60.76 a barrel at 0430 GMT, up 5 cents, or 0.1 percent, fromtheir previous close.

Brent crude futures LCOc1 were at $64.59 per barrel, down5 cents, or 0.1 percent.

U.S. crude inventories rose by 1.2 million barrels in theweek to March 9, to 428 million barrels, the American PetroleumInstitute said on Tuesday. That compared with analysts'expectations for an increase of 2 million barrels. urn:newsml:reuters.com:*:nZXN049100

Some support also came from China, where January-Februarydomestic crude oil production fell 1.9 percent on the year to30.37 million tonnes, equivalent to 3.77 million barrels per day(bpd), according to data from the National Statistical Bureau onWednesday. At the same time, crude oil throughput rose 7.3percent to 93.4 million tonnes, implying a need for moreimports. urn:newsml:reuters.com:*:nENNI360SM

Despite this, oil markets remain relatively weak. Priceshave not returned to their January highs of over $70 per barrelfor Brent and almost $67 for WTI.

"The ever-expanding U.S. supply continues to posesignificant downside risk to oil prices," said Stephen Innes,head of trading for Asia/Pacific at futures brokerage OANDA.

U.S. crude production C-OUT-T-EIA has soared by almost aquarter since mid-2016 to 10.37 million bpd, overtaking outputby top exporter Saudi Arabia.

U.S. production is expected to rise above 11 million bpd bylate 2018, taking the top spot from Russia, according to theInternational Energy Agency (IEA). urn:newsml:reuters.com:*:nL4N1QH2BK

U.S. bank Goldman Sachs said in a note dated March 13 thatthere was a "potentially large increase in (U.S.) drillingactivity in coming weeks".

Weekly U.S. crude production figures will be published bythe Energy Information Administration (EIA) later on Wednesday. EIA/S

The increases in U.S. production has this year exceeded thesupply cuts led by the Organization of the Petroleum ExportingCountries (OPEC), which have been in place since 2017 in aneffort by the cartel, and supported by non-OPEC member Russia,to prop up prices. urn:newsml:reuters.com:*:nL8N1QV3IE

Estimates by the EIA show global supplies will exceed 100million bpd for the first time in the second quarter of 2018,while demand will only break through that level in the thirdquarter, implying a slightly oversupplied market.

That would be a reversal from a supply deficit in 2017 andearly 2018.

GRAPHIC: Russia vs Saudi vs U.S. oil production   http://reut.rs/2FrFVMF
GRAPHIC: World oil supply and demand balance   http://reut.rs/2FIxGvP
(Reporting by Henning GloysteinEditing by Joseph Radford and Kenneth Maxwell) ((Henning.gloystein@tr.com; +65 6870 3263; Twitter:@hgloystein))

This article appears in: Politics , Stocks , World Markets , Commodities

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