Mubasher: Oil prices shed earlier gains on early Friday, on the back of rising US crude output and indicators of waning demand in China, despite supply shortfalls in Venezuela and the ongoing impact of  the cut deal by the Organization of Petroleum Exporting Countries (OPEC).

US Nymex futures shed 0.3% to $65.77 per barrel (pb) from their last settlement, while global benchmark Brent crudes fell also 0.3% from their last session to $77.06 pb after some early gains in the day.

The rise in US output weighed on the price gap between Nymex and Brent to over $11, recording the steepest level since 2015.

Nevertheless, Brent is still 15% higher than its level at the beginning of 2018.

The price falls come ahead of the Baker Hughes data pertaining US drill count due later in the day.

US Energy Information Administration (EIA) posted a surge in the country’s oil output, hitting another record of 10.8 million barrel per day (bpd) last week.

This represents 28% gain in two years, a monthly average growth rate of 2.3% since mid-2016, while placing the US production closer to the world’s largest output of 11 million bpd by Russia.

Moreover, China’s crude imports declined to 9.2 million bpd in May, from record high of 9.6 million bpd in the previous month, as state refineries are entering maintenance.

In addition, Venezuelan state-run oil company PDVSA is struggling to fulfil a backlog of almost 24 million barrels waiting to be shipped to customers.

The voluntary supply cut deal inked by OPEC and non-OPEC Russia in 2017 has been boosting oil prices, culminating in a tightening market.

By 7:45 am GMT, Nymex futures went down 0.62% to $65.54 pb, while Brent crude futures fell 0.51% to $76.81 pb.