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Oil Price Forecasts Lowered on Crude Glut

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Brent crude oil futures briefly rose above US$50 per barrel in early trading, but had dipped back to US$49.94 by 0040 GMT.

U.S. West Texas Intermediate crude futures fell 84 cents to $47.54 per barrel.

Trump's withdrawal from the Paris agreement, the landmark 2015 global pact to fight climate change, drew condemnation from Washington's allies and many in the energy industry - and sparked fears that US oil production could expand more rapidly than it is now.

Some commodity markets were also absorbing news that President Donald Trump said he would withdraw the United States from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from us allies and business leaders.

"This outcome could increase the supply-side equation from the United States and complicate OPEC's forward projections".

Another understanding was that Saudi Arabia would have to act decisively as it can't survive lower oil price with a large budget deficit.

Investors have returned their focus to rising production, with US average daily output last week hitting its highest level since August 2015.

Oil slid last week after the agreement by the Organization of Petroleum Exporting Countries and its allies to prolong output curbs for nine months disappointed some investors hoping for more.

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But Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance, said the USA decision to walk away from the climate agreement was not likely to impact oil markets.

Futures are down some 9 percent since OPEC's May 25 decision to extend the cuts.

OPEC last week discussed reducing output by a further 1 to 1.5 per cent, and could revisit the proposal should inventories remain high, sources told Reuters.

Still, oil markets received some support from official United States of America data that showed the country's crude inventories fell sharply last week as refining and exports surged to record highs.

Crude stockpiles were down by 6.4 million barrels in the week to May 26, compared with analysts' expectations for a decrease of 2.5 million barrels.

In the same period Brent rose more than 7.5%while WTI gained 10.10%.Oil analysts have grown more downbeat about the outlook for crude and expect prices to average around $55 a barrel this year even after OPEC and its partners agreed to restrain production into 2018, a Reuters poll of analysts showed on Friday. The African producer now cranks out around 830,000 barrels a day, a huge jump compared with the sub-300,000 barrels a day seen in last July. "But crude production is slowly but surely going to neutralize the (OPEC-led) production cut", said Sukrit Vijayakar, director of energy consultancy Trifecta. US producers aren't part of the output agreement.

Prices came under renewed pressure during European trading with fresh consideration of President Trump's overnight decision to withdraw the United States from the 2015 Paris Climate Accord.

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