Oil prices fall on OPEC output increase, rising United States crude stocks

Oil surges

Saudi Arabia, the world´s top oil exporter, is leading an effort by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by nearly 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 in order to prop up prices.

As per the data showed by the American Petroleum Institute, the stocks of us crude have increased by 2.8 million barrels in the week to 511.4 million.

The International Energy Agency said on Wednesday it expected growth in non-OPEC supply to be higher next year than growth in overall global demand.

"It's not threatening any production, so the markets have yawned", he said. Output at major American shale fields will reach a record in July, according to the EIA. The move is meant to drain the market of excess supply.

IEA expects total non-OPEC production to increase by.7 mb/d in 2017, and to grow by 1.5 million b/d in 2018, slightly more than the forecast increase in global demand.

Benchmark Brent crude LCOc1 was 17 cents lower at $48.12 per barrel by 1236 GMT, reversing gains made earlier in the session when it edged up to $48.67.

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Under the deal to support the market, OPEC is curbing output by about 1.2 million bbl/d and Russian Federation and other non-OPEC producers are cutting by half as much. In 2016, the top three crude oil producing countries were Saudi Arabia (10.46 mb/d), Russian Federation (10.29 mb/d) and the United States (8.88 mb/d).

Traders said market intelligence firm Genscape had forecast a draw down of more than 1.8 million barrels at the Cushing, Oklahoma delivery point for U.S. crude futures.

This reduction in exports is close to the 500,000 bpd output cut pledged by the Saudis in terms of the November agreement, which was extended last month to March 2018. "OPEC will therefore have to cut production further next year to ensure that the oil market is not oversupplied".

Iraq, which had been the No. 2 seller to India for years, was able to overtake the Saudis as Indian refiners have implemented plant upgrades over the past couple of years, enabling them to process crude with a higher sulfur content.

"By some accounts this increase is a troubling threat to Opec compliance, but we note that it was driven by 352,000 bpd of additional supply from Libya and Nigeria", wrote Tim Evans, energy analyst at Citigroup.

Oil is extending its slump below $50 a barrel amid speculation increasing US supplies will counter production curbs by the Organization of Petroleum Exporting Countries and allies including non-OPEC member Russian Federation. Oil stockpile draws will accelerate in the second half of 2017, according to BP Plc Chief Economist Spencer Dale.

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