Oil prices under pressure from rising OPEC supplies

U.S. crude oil inventories likely fell for the eighth straight week and refined product stockpiles were also forecast to have dropped last week, a preliminary Reuters poll showed.

At 15:22 BST, Nymex-priced West Texas Intermediate crude was down 3.16% to $48.09 a barrel.

West Texas Intermediate, the USA benchmark for the price of oil, still in the July contract, was up 0.20 percent to $48.41 per barrel.

USA crude stocks fell sharply last week, driven by a surge in refining and exports to record highs, while gasoline inventories also dropped sharply ahead of the start of the summer driving season, the Energy Information Administration said.

Due to Monday's holiday, weekly inventory reports from American Petroleum Institute and the Energy Information Administration have been delayed to 4:30 p.m. EDT (2030 GMT) on Wednesday and 11:00 a.m. on Thursday, respectively.

Oil prices dropped on June 2 amid worries that U.S. President Donald Trump's decision to withdraw from a global climate pact could spark more crude drilling in the U.S., stoking a persistent glut in global supply.

According to Platts Oil Futures editor Geoffrey Craig, U.S. crude oil inventories have reduced the surplus to the five-year average by 17 million barrels since the beginning of the year.

The global oil market reacted Wednesday to the news that Libya, one of the major oil producers in the Organization of Petroleum Exporting Countries (OPEC), was increasing its crude output to 827,000 barrels per day.

"US oil production has grown faster at 50 United States dollars than any analysts in the market predicted", Bjørnar Tonhaugen, Rystad's vice president of oil markets, said in a statement.

Part of the problem for OPEC is oil supply in the United States, where shale production is booming. The event is likely to lead to increased production from the USA and eventually skew OPEC's price protections.

Traders said the price declines were a result of higher output in conflict-torn Libya, which was adding to a relentless rise in US production.

Meanwhile compliance with the OPEC-led deal remained high among the group's members, with industry sources saying that Russian figures for May also show output in line with its pledge.

"The two countries (Nigeria and Libya) are still well below the expected output quota, it is in our interest to be friendly and brotherly, and exempt them so that they get the maximum revenue from the amount produced".

Oil prices pared early gains on Thursday despite USA industry data showing a big drop in crude stocks last week, with investors sceptical that OPEC-led cuts will be enough to rebalance an oversupplied market.

Despite this, Brent futures are still down about 7 percent from their open on May 25, when OPEC announced it would extend its production cut into 2018.

Guidance from publicly-listed shale producers for 2017 points to a 60% year-on-year increase in capital expenditure and an 18% year-on-year rise in production, according to a PIRA report.

  • Zachary Reyes