Oil, briefly higher on lower rig counts, falls on US output outlook

Iran's Oil Minister Bijan Zangeneh speaking at a news conference last month in Tehran. Mr. Zangeneh says Iran would prefer to see oil prices around $60 a barrel

West Texas Intermediate for April delivery traded at $62.06 a barrel on the New York Mercantile Exchange, up 2 cents at 1:35 p.m.in Tokyo.

LONDON, March 12 (Reuters) - Oil prices fell on Monday on expectations that US output will rise this year, erasing earlier gains buoyed by lower weekly USA rig counts and falling USA unemployment.

Brent for May settlement added 12 cents to $65.61 a barrel on the London-based ICE Futures Europe exchange.

Helping the dip, hedge funds and money managers cut their bullish wagers on US crude oil for the first time in three weeks, data showed on Friday. Gross short positions on the New York Mercantile Exchange climbed to their highest in almost a month.

"Rising production and inventory in the United States has been reducing fund sentiment since it peaked at the end of January", ING said in a note.

Oil markets signalled a new high for oil prices Monday as prices climbed on the back of a drop in the number of United States rigs drilling for more production. That followed government data showing the USA added 313,000 jobs in February, the biggest increase since July 2016 and more than the median estimate of 205,000 new positions. American oil explorers idled four rigs last week after six consecutive increases in drilling, easing fears over surging shale production.

That has undercut some of the enthusiasm for oil, as investors weigh increased USA supply against the likelihood that the Organization of the Petroleum Exporting Countries and non-OPEC producers will maintain supply cuts that have been in effect for more than a year.

That is more than top exporter Saudi Arabia producers and almost as much as Russian Federation pumps out, at nearly 11 million bpd.

"While Friday's favourable jobs data and oil rig decline might suggest a test of the high side of this expected range first, we still view downside price risk exceeding that to the upside", he said. Iran wants OPEC to work to keep oil prices at about $60 a barrel as an increase toward $70 will encourage shale oil output, the country's Oil Minister Bijan Zanganeh said, the Wall Street Journal reported.



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