Oil prices fall as United States stocks rise, output increase weighs

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Crude oil drew support early Tuesday as the U.S. Dollar fell to its lowest level in more than a week against a basket of currencies on news from South Korea that North Korea was willing to hold talks with the United States on denuclearization, and would suspend nuclear tests during any discussions.

As of 1633 GMT, front month West Texas Intermediate crude oil futures were lower by 0.76% at $62.10 a barrel on the ICE.

The resignation of Gary Cohn, economic adviser to U.S. President Donald Trump, who was seen as a bulwark against protectionist forces in the government, triggered a drop in Wall Street stocks and tempered investor risk appetite.

Crude inventories rose by 5.661 million barrels last week to 426.880 million barrels, data from the American Petroleum Institute showed on Tuesday.

The EIA report also showed gasoline supplies declined for the first time since January and distillate inventories fell for a fourth straight week.

For 2019, the Energy Information Administration forecast a crude production increase of 570,000 barrels a day to 11.27-million barrels a day.

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Crude stocks at the Cushing, Oklahoma, delivery hub fell by 605,000 barrels, EIA said.

"The smaller-than-expected inventory build led to swift short covering", said Phillip Streible, senior market strategist at RJO Futures in Chicago. Since the start of the year, there has been only one week featuring a decline in gasoline stockpiles, while the total build since then stood at 17.8 million barrels. Cohn's resignation announcement came after the US markets closed on Tuesday.

Oil prices pared losses after the data as most market participants had expected a bigger increase in inventories amid refinery maintenance season.

Oil prices declined on Wednesday after official data showed that the USA oil production continued to increase.

While oil stocks typically rise this time of year as refineries frequently close for maintenance, an increase in US crude inventories has weighed on prices.

US crude oil output is set to top 11 million barrels per day this year, making it the world's largest producer and threatening to offset the boost to prices from reduced supply from rivals within OPEC.

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