UPDATE 7-U.S. crude falls 1 percent on concerns over rising output

Reuters

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    * U.S. shale output seen at record high 6.95 mln bpd in
April -EIA
    * Oil bounces around on Tillerson ouster, weak stock market 
    * Front/second-month spread moves into contango
    * U.S. crude inventories seen up for 3rd week - Rtrs poll
    * Coming Up: API's U.S. inventory data at 4:30 p.m. (2030
GMT) 

 (Updates prices)
    By Ayenat Mersie
    NEW YORK, March 13 (Reuters) - Oil fell more than 1 percent
on concerns over rising U.S. production and as equities fell,
erasing earlier gains driven in part by the firing of U.S.
Secretary of State Rex Tillerson.
   Brent crude futures  LCOc1  dropped 31 cents, or 0.5 percent,
to settle at $64.64 per barrel. U.S. West Texas (WTI) crude
futures  CLc1  fell 65 cents, or 1.06 percent, to $60.71 per
barrel.
    The market has been buffeted by a number of factors in an
active session, including weakness in the equity market, which
has trended in tandem with oil of late.  .N 
    U.S. production has reached an all-time record and weekly
data last week showed overall output rising further, to more
than 10.3 million barrels per day. 
    U.S. crude production from major shale formations was
expected to rise in April to a record 6.95 million bpd, the U.S.
Energy Information Administration (EIA) said on Monday.
 urn:newsml:reuters.com:*:nL1N1QU1BJ
    "There’s no stopping us and OPEC's frustration levels are
going to grow," said Philip Streible, senior market strategist
at RJO Futures in Chicago, referring to efforts by major
producers to curb output since last year.
    Tillerson's firing increases risks to the multilateral
agreement to limit Iran's nuclear capabilities, raising
questions about potential effects on output by the third largest
crude oil producer in the Organization of the Petroleum
Exporting Countries. 
    CIA director Mike Pompeo is the pick to replace Tillerson;
he has called for the 2015 Iran nuclear deal to be scrapped.
 urn:newsml:reuters.com:*:nL1N1QV0JE
    Trump has threatened to withdraw from the accord between
Iran and six world powers unless Congress and European allies
"fix" it with a follow-up pact.
    "The market is having a wobble on the back of the potential
impact on future supply from Iran and also for the ramifications
for the Middle East as a whole," Ole Hansen, senior manager at
Saxo Bank, said.
    Concerns about supply have had an effect in the forward
curve in the futures market, where the May contract has
outperformed April, putting May's price higher than April's,
known as "contango."  CLc1-CLc2  
    When the front-month contract is trading at a lower level
than a later-dated contract, it suggests emerging concerns about
growing supply, and reduced need to buy oil now.  
    "The market switched from backwardation to contango in the
crude oil curve today... that’s a situation that implies
weakness; it’s a situation that, if it persists, will lead to an
increase in storage," said Bob Yawger, director of energy
futures at Mizuho in New York.     
    Data from the American Petroleum Institute will be released
at 4:30 p.m. on Tuesday, and is expected to show a build U.S.
crude inventories for the third straight week. urn:newsml:reuters.com:*:nL3N1QU4T1
    

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GRAPHIC: Russia vs Saudi vs U.S. oil production    http://reut.rs/2FrFVMF
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 (Additional reporting by Amanda Cooper in LONDON, Henning
Gloystein in SINGAPORE; Editing by Marguerita Choy and Diane
Craft)
 ((ayenat.mersie@thomsonreuters.com; +1646 223 4165))

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