Oil prices were only slightly higher on Wednesday as support from falling US production was countered by a strengthening US-dollar and concern about slowing demand. US crude futures were at $36.60 a barrel at 4.49am GMT, up 10c from their last settlement and 40% above February's 2016 low. Brent crude futures were at $39.41 a barrel, up 9c and also about 40% higher than 2016 lows hit in January. Analysts said falling US output was lending support to the market but that concern over slowing demand and an ongoing global production and storage overhang was capping any potential for bigger price gains. "US crude oil production (is) showing a slow decline. We continue to believe that more corrections should be seen," Singapore-based brokerage Phillip Futures said, adding that under current conditions the highs of $40-$41 a barrel reached earlier this week were "as high as it can go". Price gains were also capped by a strengthening US dollar, which reversed recent losses against leading currencies, potentially hampering demand as dollar-denominated crude gets more expensive as the greenback rises. Also preventing a fundamental shift towards higher prices is a concern over faltering demand in China, where the economy is growing at its slowest pace in a generation. China's February trade performance was far worse than economists had expected, with exports tumbling the most in more than six years. Although China imported record crude volumes of 8-million barrels a day in February, analysts expect this figure to fall as the Beijing scales back buys for its strategic reserves, and car sales begin to fall as the sharp economic slowdown starts to show results. Additionally, chances of a co-ordinated freeze in production to halt a ballooning global supply glut of more than 1-million barrels a day above consumption are ebbing as Organisation of the Petroleum Exporting Countries (Opec)-member Kuwait said it would cap output only if all major producers participated, including Iran, which has balked at the plan. One key factor in determining the oil market balance will be US output, which the government said would be 8.19-million barrels a day in 2017, down from more than 9-million barrels a day currently. Fresh US output data are scheduled to be published later on Wednesday.
