Oil prices fall as global stockpiles remain persistently high

Oil prices climb on stronger demand

Oil prices climb on stronger demand

In a bid to reduce the glut of oil and shore up prices, OPEC countries agreed to cut production from the start of the year, with non-cartel producers led by Russian Federation partially matching the cuts.

"Dramatic improvement" in output from Libya and Nigeria diluted OPEC's actual supply cut of 920,000 barrels a day in June, nearly halving it to 470,000, the IEA said in a report.

The Organization of the Petroleum Exporting Countries and several non-OPEC producers including Russian Federation have agreed to cut production by around 1.8 million barrels per day until March 2018 to ease a global crude glut spurred by booming USA output.

While the oil production benchmark in the budget was 2.2 million barrels per day (mbpd), Nigeria is now producing about 1.7mbpd of oil without condensate, and was still within the price band of $42.50 per barrel which the budget has.

Benchmark Brent crude was fetching $47.87 per barrel, up 35 cents, in late afternoon trading on Wednesday.

Oil rose on again on Wednesday after the US Energy Information Administration (EIA) reported a drop in crude supplies of 7.6 million barrels for the week to July 7.

"Each month something seems to come along to raise doubts about the pace of the rebalancing process".

OPEC has promised to curb production by about 1.2 million bpd between January this year and March 2018, while Russian Federation and other non-OPEC producers say they will hold back half as much.

The agency forecast non-OPEC supply would grow by a combined 2.1 million b/d over 2017 and 2018, led by the US.

He added that a discount of at least $2 a barrel on American oil to Dubai crude is "ideal" to cover freight costs now.

Goldman Sachs warned on Tuesday that crude oil could plunge below $40 a barrel "soon" if OPEC fails to take further action.

The analysts poured cold water on any hopes of significantly higher oil prices in the longer term.

Similarly, the US EIA has also cut its WTI forecast for 2017 from $50.78 per barrel to $48.95 per barrel and for 2018 from $53.61 per barrel to $49.58 per barrel. They now see Brent around $US55 a barrel in 2020, down from their previous forecast of $US82, as the market fully comes to terms with the new era of shale oil. The IEA said inventories in developed countries have fallen - down to 266 million barrels above the five year average from 300 million barrels in April. However, lasting price movements could be limited over the next year because some USA tight oil producers have used financial instruments to guarantee a price above $50/b for their expected production.

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