By Henning Gloystein
SINGAPORE (Reuters) - Oil fell on Friday, erasing gains earlier in the session, as concerns over oversupply outweighed strong Chinese import figures.
Benchmark Brent crude was at $65.31 per barrel at 0650 GMT, down 23 cents after hitting a session high of $65.75. U.S. crude was 33 cents lower at $58.61 a barrel.
Oil prices already tumbled 3 percent on Thursday as a resurgent dollar erased gains from the past two sessions, and after some U.S. producers said they would ramp up drilling after months of falling activity if prices continued to rise.
Analysts said that Brent seemed capped around $70 a barrel, and may be overvalued already as there was still an oversupply in crude and U.S. producers, which have sharply reduced drilling in recent months of low prices, could increase production.
"U.S. producers... indicated they would ramp up drilling activity if prices continued to rise," ANZ bank said in a note.
More From This Section
HSBC questioned the economics of oil's 40 percent price rise since January.
"It's a little confounding that the stuff has again gotten more expensive, with Brent now closing in on $70 per barrel," the bank said in a note. "After all, the global economy last quarter probably grew at its slowest pace since the Great Recession."
Credit Suisse said that oil's technical indicators were also weak as unusually large speculative net long positions had appeared in oil markets while new shorts had also emerged recently.
"From a positioning perspective alone, a price correction could easily be exacerbated and turn into a rout," it added.
Prices had initially stabilised on Friday on the back of healthy Asian demand data.
China imported 30.29 million tonnes of crude oil in April (222 million barrels), up 13.0 percent from 26.81 million tonnes in the previous month, although its exports, denominated in yuan, fell 6.2 percent in April from a year earlier.
Thomson Reuters Oil Research and Forecasts said early indicators showed that seaborne crude flows into Asia would be around 80-82 million tonnes (586-601 million barrels) in May, broadly steady with April.
(Editing by Richard Pullin and Biju Dwarakanath)
