Today's price increases is due in large part to the Energy Information Administration's revised forecast that USA oil production would produce 9.9 million barrels daily in 2018-down from its previous forecast of 10 million bpd.
Increased oil production by Libya and Nigeria combined with increased production by Saudi Arabia lead the group's total production to increase by 32.6 million barrels per day in June. In its monthly market report for July, the Organization of Petroleum Exporting Countries said market balance, reflected in part by the EIA's report, was pushed back into 2018.
Crude oil prices remain under $50 a barrel.
The expectation for lower prices will drag on USA oil production in 2018, according to EIA. US crude was 25 cents lower at $44.15.
Oil futures were little changed in NY, trading near $44 a barrel following a report that Saudi Arabia exceeded its agreed-upon output limits last month. Brent crude, the global benchmark, was up 86 cents, at $48.38 a barrel by 0824 GMT.
A lot of analysts are looking at a positive future for the crude oil and the output cuts that were announced; the initial output cut expectation for last week was at 2.8 million barrels but it turns out that inventories fell by 8.1 million barrels per day.
US inventories have been closely watched amid market concerns that USA output from shale formations could offset OPEC's efforts to throttle back production and curb a global supply glut.
And the punchline: OPEC expects to oversupply global markets markets by ~900k b/d in 1Q next year, with USA shale scapegoated as the culprit for OPEC's failure to bring the market back into equilibrium: Non-OPEC supply to grow by 1.14m b/d in 2018, up from 800k b/d in 2017. Traders were looking for a modest draw of 2.99 million barrels. In 2018, crude oil production is forecast to rise to an average of 9.9 million barrels per day.
Before EIA released the storage report, Brent was up 1.9% and United States was up 2.4%. USA refineries produced about 10.5 million barrels of gasoline a day last week, up by about 100,000 barrels a day compared to the prior week. U.S. crude inventories remain more than 100 million barrels above the five-year average and the oil rig count is at the highest level since April 2015.
The Organisation of Petroleum Exporting Countries (OPEC) has revealed that Nigeria's oil production is at a two year high, but that in itself may be a problem for the cartel and the country.
Oil supply, the EIA said, is poised to drop before the demand for oil starts to wane, meaning there is a period of high oil prices up ahead. Nigeria and Libya, OPEC-members who are exempt from production limits, have also increased output.
USA crude imports fell last week by 282,000 bpd.