Oil prices fell on June 8 as weakening demand in China and surging U.S. output weighed on markets despite supply woes in Venezuela and Iran on top of OPEC's production cuts.

Brent crude futures fell 45 cents to $16.87 a barrel (bbl) by 8:22 a.m. CDT (13:33 GMT). U.S. West Texas Intermediate (WTI) crude futures recovered some earlier losses to trade 8 cents down at $65.87. On the week, both contracts were set to trade flat.

China's May crude oil imports eased away from a record high hit the previous month, customs data showed on June 8, with state-run refineries entering planned maintenance.

May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bbl/d). That compared with 9.6 million bbl/d in April.

Further weighing on prices has been rising U.S. output, which hit another record last week at 10.8 million bbl/d.

That's a 28% gain in two years, putting the U.S. close to becoming the world's biggest crude producer, edging nearer to the 11 million bbl/d churned out by Russia.

The surge in U.S. production has pulled down WTI into a discount vs. Brent of more than $11/bbl, its steepest since 2015.

Market Still Tight

Despite June 8's falls, Brent remains more than 15% above its level at the start of the year.

U.S. investment bank Jefferies said the crude market is tight and spare capacity could dwindle to 2% of demand in the second half of 2018, its lowest level since at least 1984.

Markets have been tightened by supply trouble in Venezuela, where state-owned oil company PDVSA is struggling to clear a backlog of about 24 million bbl of crude waiting to be shipped to customers.

More generally, Brent has been pushed up by the voluntary production cuts put in place last year, led by OPEC and Russia.

OPEC and Russia meet June 22-23 to discuss production policy.

On June 8, OPEC's third-largest producer Iran criticized a U.S. request that Saudi Arabia pump more oil to cover a drop in Iranian exports and predicted that OPEC would not heed the appeal.

"It’s crazy and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran’s exports due to their illegal sanctions,” Iran’s OPEC governor told Reuters.