Oil bounces but stuck near 2017 lows on supply overhang

Crude oil prices fell almost 4 percent Wednesday after government data showed gasoline inventories and oil production increased.

In May, OPEC decided along with Russian Federation and other non-members to extend production cuts that began in January until March 2018.

Prices then came under pressure following the American Petroleum Institute (API) data with a headline build of 2.75 million barrels.

July WTI (West Texas Intermediate) crude oil (USO) (UCO) (XOP) futures contracts fell 0.04% to $44.7 per barrel in electronic trade at 1:15 AM EST on June 15, 2017.

The dip from late May still continues to roll until today; crude prices sit on a total of 10% decline this week.

That suggests that the global crude oil market has got some support from the efforts of the Organization of the Petroleum Exporting Countries (Opec) and non-Opec oil producers to cut production. This followed the restart of Forcados loadings for the first time since October 2016, " the report said.

The report said: "Overall, stable demand and low volatility are the factors that should push Brent prices up by $2 or $3 in the coming weeks". "Even if you do this, next year you'll still have to cut more, so it comes down to how far the Saudis are prepared to cut".

The report also showed that gasoline inventories increased by 2.1 million barrels, compared to forecasts for a drop of 457,000 barrels.

Oil prices fell by one per cent early on Wednesday after data showed a build in United States crude stocks and Opec reported a rise in its production despite its pledge to cut back.

Global oil and gas major BP Plc expects the crude oil price to stabilise at $50-55 per barrel by the next year, rising from the current levels of about $45 per barrel, the group chief executive Bob Dudley said on Thursday. This followed a plunge in NY futures the previous day, with West Texas Intermediate ending the session under the $45 mark.

Looking at anticipated growth in global oil demand this year, OPEC reiterated its forecast of 1.27 million barrels per day (bpd).

Faced with bearish data on both the supply and demand fronts, "the market is feeling out where the bottom might be", said Toshinori Ito of Ito Research and Advisory.

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.

In Nigeria, production was up more than 174,000 bpd to 1.68 million bpd as supplies sidelined by militant attacks on energy infrastructure previous year came back into operation. As a result, the need for crude from Opec won't be high enough for the group to reverse cuts it's now making to drain a global glut.

And at a meeting at the end of May, both Opec and non-Opec countries chose to roll over the output cuts for a further nine months.