Brent stays above $66 after dip on oversupply worries

BEIJING (Reuters) - Brent (brent.167)crude remained above $66 barrel on Wednesday, after resuming its drift downwards amid a glut of oil on the market, following a short-lived reprieve the previous day when a weaker dollar had provided some support to prices.

The glut has seen the trading arm of PetroChina turn into a seller this month, after it bought a record number of cargoes of Middle East crude in October.

Worries about oversupply have pushed Brent down 40 percent since June.

"Notwithstanding day-to-day movements, the fundamental picture hasn't really changed, and that is one of supply outstripping demand growth for most of the year," said Phin Ziebell, a senior analyst at National Australia Bank.

"It's an incessant march downwards, and it would be interesting to see where it bottoms out, but there doesn't seem to be any sign of it so far."

On Wednesday, Brent's front-month futures contract traded down 64 cents at $66.20 a barrel by 0644 GMT (01:44 a.m. EST) after falling more than a dollar to $65.78, still above a five-year low of $65.29 touched on Tuesday.

On Monday alone it fell $2.88, or 4.2 percent, its third-largest one-day loss this year.

U.S. crude futures fell $1 to $62.82 a barrel at one point before picking up slightly to $63.09, down 73 cents on the day. These West Texas Intermediate futures also closed higher on Tuesday after a fall of $2.79, or 4.2 percent, on Monday.

U.S. inventories rose 4.4 million barrels in the past week to 377.4 million barrels, compared with analysts' expectations of a drop of 2.2 million, according to the American Petroleum Institute on Tuesday.

The U.S. Energy Information Administration (EIA) has trimmed its forecast for domestic oil production growth for 2015 by about 100,000 barrels per day, a sign of the potential impact of lower prices and weaker-than-expected global demand growth.

"In the midst of oversupply, we also look forward to see how U.S. crude field production is affected by falling oil prices. This would be more crucial in seeing how inventories would be like moving into 2015," said Daniel Ang of Phillip Futures in a note.

Members of the Organization of the Petroleum Exporting Countries (OPEC) are divided on how to respond to the global surplus and falling prices. The cartel may still hold an emergency meeting before its June gathering, Algeria's energy minister said on Tuesday.

Top oil producer Saudi Arabia blocked production cuts at the last meeting in November and has taken steps to shore up its market share.

(Editing by Alan Raybould and Sunil Nair)