Oil Set for Longest Run of Weekly Losses Since 2015 Amid Glut

Oil edges down as OPEC sees market rebalancing at slower pace

Global crude oil prices fell to the lowest in more than a month Wednesday after data from the Energy Information Administration said USA crude stocks fell by a much less-than-expected amount, raising questions about overall demand into the peak of the summer driving season.

Earlier, the US Energy Information Agency (EIA) said in its report that OPEC crude oil production is expected to average 32.3 million barrels per day in 2017 and 32.8 million barrels per day in 2018. The IEA expects US crude production to grow by 780,000 barrels per day next year. Inventories fell due to a rise in United States crude oil refinery demand to 17,256,000 bpd (barrels per day) on June 2-9, 2017.

Last month, OPEC and other exporters extended an agreement to remove 1.8 million barrels a day from the market in order to shrink brimming global stockpiles of crude oil.

Oil prices climbed up on June 16 but remained near six-month lows, held down by an ongoing supply overhang that persists despite an OPEC-led effort to cut production and prop up crude markets.

High inventories have weighed on the futures' market's crack spreads, a measure of refining margins, throughout spring when refiners produce more gasoline for driving season. The pressure comes from the enormous overflowing on global oversupply; according to OPEC countries and non-OPEC participating countries vowed to keep production at the 1.8 million barrels per day levels till the end of the year and just before the first quarter of 2018 ends.

US drilling activity has continued apace, driving up USA output by more than 10 percent since mid-2016 to above 9.3 million bpd.

"I'm only looking at the first week of June, and on the face of it there's not much change", said Roy Mason of Oil Movements, a UK-based firm that estimates supply by tracking tanker shipments.

In addition, the International Energy Agency (IEA) said, Wednesday, it has expectations that non-OPEC growth supply should be higher within the next year than overall global demand growth.

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Distillate inventories fell this week by 1.451 million barrels, while inventories at the Cushing, Oklahoma, site fell by 833,000 barrels after last week's dip of 1.56 million barrels.

Global oil demand growth will accelerate next year to 1.4 million barrels a day, or 1.5 percent, led by economic expansion in China and India.

Oil stocks are near record highs in some parts of the world, and producers outside the Opec deal are increasing output.

OPEC now expects US production to increase by 800,000 bpd in 2017.

Since late last month, oil prices have dropped by more than 12%.

More than half this growth will come from the US, which the IEA expects to increase production by 430,000 B/D in 2017 and 780,000 B/D in 2018.

The Organisation of the Petroleum Exporting Countries agreed to extend that deal that began in January through March 2018, but ongoing growth in USA production, along with exemptions for non-members Nigeria and Libya, have offset those cuts to some extent.

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