US oil production seen thwarting OPEC effort to boost prices


They stand 292m barrels above the five-year average and are higher than when Opec chose to cut output, the IEA said. This sector has been one of the biggest headaches for OPEC as they has been flexible in increasing output in response to higher prices.

"Our first outlook for 2018 makes sobering reading for those producers looking to restrain supply", said the report.

But adherence to the cuts is under scrutiny and the producer group said this week its output rose by 336,000 bpd in May to 32.14 million bpd.

The world's oil glut is likely to persist next year in a blow to efforts by major producers to shore up the oil price by cutting output, according to a leading energy authority.

Last month, Iran exported about 1.1 million bpd to Europe including Turkey, nearly reaching pre-sanction levels and only slightly below the 1.2 million bpd supplied to Asia, the source said. "Higher prices in winter than summer?"

With regards to the prices, the ASB indicated that the OPEC Reference Basket averaged $40.76/b in 2016, down from $49.49/b in 2015 and reaching the lowest yearly average since 2004. Saudi inventories rose to 267.854 million barrels in March from 264.704 million in February, according to official data.

China, the world's second-largest crude importer, reported industrial production for May rose a faster-than-expected 6.5% on year, and retail sales also gained a clip quicker at 10.7%, while fixed-asset investment came in at a less-than-seen 8.6%.

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U.S. West Texas Intermediate crude futures fell almost 4 percent, plunging to a five-week low below $45 a barrel, following the report.

The IEA said Wednesday that Iraq's rate of compliance with OPEC, non-OPEC curbs is about 55 percent, while Saudi Arabia is among nations conforming in full.

In its monthly assessment of the market, the agency said global crude inventories were 292m barrels higher than the five-year average.

"Oil has been weighed down by the market's impatience with the generally slow pace of the global inventory drawdown amid a significant recovery in global oil supplies, particularly from the US", OPEC said in its June report today. The credit must go to Saudi Arabia and Russian Federation for their strong leadership in ensuring the rest of OPEC adopted the proposal they first jointly made over three weeks ago.

Supply grew by 585,000 bpd last month alone, with the rapid return of USA shale adding to strong gains from Opec's exempt members, Libya and Nigeria. The last time non-OPEC supply growth exceeded the increase in demand was 2014, when oil prices slumped 46 percent.

But the kingdom would still keep crude production and supply within its OPEC target, another source said.