Oil prices slip as US rigs rise, demand growth falters

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OPEC and its partners in the agreement for the global output cuts do not target any oil price and the volatility in the oil market is due to speculation, Al-Falih said.

Signs of faltering demand stoked weak sentiment, prompting price levels comparable to when the output cuts were first announced late a year ago.

Brent crude futures were at $46.97 per barrel at 0436 GMT, only slightly above their last settlement.

Meanwhile, the price for July futures of West Texas Intermediate (WTI) has grown by 0.04 percent and stood at $44.76 per barrel.

Traders said that the main factor driving the low prices was a steady rise in United States production undermining the Opec-led effort to tighten the market.

"That's 22 weeks in a row that oil rigs have been added, a record run", said Greg McKenna, chief market strategist at futures brokerage AxiTrader. Last month, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day. In the last week, there was an increase of 6 operating rigs in the USA, pushing the total number to 747, the highest since April 2015.

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The oil market is expected to balance in the fourth quarter even as output from fellow OPEC members Libya and Nigeria as well as from shale oil producers is on the rise, according to Saudi Energy Minister Khalid Al-Falih.

There are also indicators that demand growth in Asia, the world's biggest oil consuming region, is stalling.

India, which recently overtook Japan as Asia's second biggest oil importer, saw May's demand for oil fall by 4.2 per cent in May, compared with the same month past year In China, which is challenging the United States as the world's biggest importer, oil demand growth has been slowing for some time, albeit from record levels, and analysts expect growth to slow further in coming months.

"In my opinion, market fundamentals are going in the right direction, but in light of the large surplus in stockpiles over the past years, the cut needs time to take effect", he told the newspaper, referring to a global deal to curb oil production. In China, oil demand growth has been slowing for some time, albeit from record levels.

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