Crude price drop is symptom of rising USA clout

West Texas Intermediate crude futures fell sharply, dropping more than 4% to $46.12/bbl as of 10:04 a.m. CT (15:04 GMT).

US crude prices sank almost 5 per cent, despite growing friction among disparate members of the Organization of Petroleum Exporting Countries and an attack by militants in Tehran, one of the largest OPEC producers. US benchmark futures on oil have slid more than 11 percent in 10 days of trading.

Imports from Iraq surged to 1.14 million barrels a day, the most since 2012, according to preliminary EIA data.

Some analysts saw a risk that rivalries between OPEC members could weaken the production cut agreement.

The revision is another sign that US drillers are taking full advantage of higher oil prices buoyed by OPEC 's deal with crude exporters to limit production in a bid to shrink a global oversupply.

NEW YORK, June 7 (Reuters) - Oil prices slid more than 3.5 percent on Wednesday after the USA government reported an unexpected increase in inventories of crude and gasoline, fanning fears that output cuts by major world oil producers have not drained a global glut very much.

Prior to the strike, Libya's oil output was at its highest since October 2014, when the country pumped 850 000 barrels a day.

According to Reuters, Qatar had agreed to cut 30,000 barrels a day as part of the Organisation of the Petroleum Exporting Countries' (OPEC) deal to cut production by 1.2 million barrels per day (bpd) in November, which was later subsidised by non-OPEC to 1.8 million bpd.

The U.S. government agency also reported an unexpected climb of 3.3 million barrels in domestic crude inventories. Total motor gasoline supplied (the agency's measure of consumption) averaged about 9.6 million barrels a day for the past four weeks, down by 0.7% compared with the same period a year ago. While the output cap agreement that was signed previous year was extended - as expected - the market was secretly hoping for more ... like a deeper output cut amid still-bloated inventories.

OPEC and other producers including Russian Federation have pledged to cut output by about 1.8 million barrels per day (bpd).

The Canadian dollar, which is closely tied to movements in oil prices, traded lower on Wednesday. The fall in inventories at Cushing also helped oil prices.

BP (BP) shares fell 1%.

American crude production will average more than 10 million barrels a day in 2018, breaking a record nearly five decades old, according to the Energy Information Administration's monthly Short-Term Energy Outlook report Tuesday.

  • Zachary Reyes