The price for August futures of Brent crude oil has decreased by 0.20 percent to $45.93 per barrel as of 06:22 (GMT +4).
The recent developments in the oil market have completely erased all the positive effects to energy that the OPEC output caps had had, and are putting into doubt OPEC's ability to affect the global crude market to any substantial degree.
Crude futures edged higher Wednesday but still hovered around bear-market lows ahead of the release of official USA oil stock data. United States output has recovered sharply since the middle of 2016 as USA shale producers have successfully managed to cut costs and consolidate following the downturn when many were forced out of the industry.
In focus for oil traders on Wednesday is weekly US inventory data from the Energy Information Administration.
Oil prices added to earlier gains Wednesday after data from the U.S. Energy Information Administration showed that domestic crude supplies fell by 2.5 million barrels for the week ended June 16. August crude rose 47 cents, or 1.1%, to $43.98 a barrel on the New York Mercantile Exchange. Currently, Iran is one of three OPEC countries that have not been asked to cut oil production.
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Oil prices have been depressed since the Organization of the Petroleum Exporting Countries and other producers decided on May 25 to extend an agreement that withholds nearly 2% of the global crude supply from the market. Traders and analysts will be looking at all inventories of all petroleum products, which rose by almost 7 million barrels in last week's report.
"The decline in oil prices has paused at the bottom of the downward sloping channel with support at $44.09 and resistance at $46.75 and $48.70", Ciana said.
While cheaper oil is good news for consumers, another big slump in oil prices has ramifications for both equity and currency markets.
OPEC and non-OPEC oil producers' compliance with the output deal reached 106 percent in May, a source familiar with the matter said on Tuesday. US oil output is at a 22-month high and inched higher yet again last week, rising by 20,000 barrels a day, according to the EIA. A joint OPEC, non-OPEC committee concluded on Tuesday that the market won't rebalance until the second quarter of 2018, beyond the current expiry of the group's output agreement. If US Crude inventories remain at elevated levels and US Shale's aggressive production continues to overshadow OPEC's cuts, oil is likely to remain depressed for prolonged periods.
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