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UPDATE 9-Oil falls on U.S. stockpiles, expected unchanged OPEC stance

Published 03/12/2015, 03:02 am
© Reuters. UPDATE 9-Oil falls on U.S. stockpiles, expected unchanged OPEC stance
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* Russia extracting oil at post-Soviet record

* OPEC expected to maintain high output

* Brent on track to close at its lowest in two weeks (Updates with EIA data)

By Simon Falush

LONDON, Dec 2 (Reuters) - Oil fell below $44 a barrel on Wednesday as an unexpected rise in U.S. inventories added to the global glut and investors discounted the possibility of OPEC cutting output at its policy meeting this week.

Brent crude LCOc1 was down 85 cents at $43.59 a barrel by 1430 GMT, falling for a fifth consecutive session. It dropped as low as $43.51, its weakest level since Nov. 18, and was on track for its lowest close in two weeks.

U.S. weekly crude stocks rose by 1.18 million barrels, data from the Energy Information Administration showed, compared with analysts' expectations for a fall of 471,000 barrels. urn:newsml:reuters.com:*:nL1N13R1DL

"It is another data point pointing to a continued glut in the U.S. markets for oil as production declines remain stubborn even with oil prices hovering at current levels for a significant amount of time now," Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland said.

U.S. crude CLc1 traded 78 cents down at $41.07 a barrel.

Current oil production is substantially outpacing demand and the growing global surplus has sent prices tumbling by more than 60 percent since June 2014.

The Organization of the Petroleum Exporting Countries (OPEC), however, is not expected to budge from its stance of keeping output high to defend market share against producers such as Russia and North America. urn:newsml:reuters.com:*:nL8N13R1T1

"The market ascribes an extremely low probability to a change in OPEC policy," said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.

"If investors thought there was even the slightest risk, we would have seen prices rise in the run up to the meeting."

Beyond OPEC's meeting, oil traders remained focused on growing stockpiles and high production.

Russia continued extracting oil at a post-Soviet record of 10.78 million barrels a day (bpd) in November despite low oil prices, Energy Ministry data showed on Wednesday. urn:newsml:reuters.com:*:nL8N13R19E

Data from the American Petroleum Institute (API) showed a 1.6 million-barrel rise in U.S. crude inventories last week to 489.9 million barrels. urn:newsml:reuters.com:*:nZXN04LW00

Oil was also pressured by the dollar's strength, which makes it more expensive for holders of other currencies .DXY .

Many analysts remain sceptical about oil prices recovering in 2016.

"We maintain our bearish or sideway move in oil prices in the next 2-3 months as things haven't really changed fundamentally, despite data showing a decline in stocks builds by end of next year," Natixis oil analyst Abhishek Deshpande told the Reuters Global Oil Forum.

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ID:nL8N13R1T1 Russia keeps oil production at record high in November

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