Crude oil inventories again fell significantly, draining US stockpiles by more than 10 million barrels over the past two weeks, the Energy Department reported Thursday.
As more U.S. drilling mean greater hardship for OPEC and other major producers' attempt to control output so as to cut the global supply glut and alleviate prices. It's what the market needs to get a little more excited about prices.
Oil posted its biggest weekly drop in four weeks amid questions over the effectiveness of OPEC's deal to help rebalance the market as U.S. production continues to grow.
"We may or may not see more huge draws". The event is likely to lead to increased production from the US and eventually skew OPEC's price protections.
The U.S. withdrawal from the landmark 2015 global agreement to fight climate change drew condemnation from Washington's allies - and sparked fears that U.S. oil production could expand even more rapidly.
Last week, crude came under pressure despite a sizeable decline of 6.43 million barrels reported in United States crude stocks for the week ended May 26, in addition to a draw of 2.86 million barrels in gasoline inventories.
Faced with lingering glut woes, the oil cartel also discussed last week reducing output by a further 1 to 1.5 percent, and could revisit the proposal should inventories remain high, according to sources.
China Will Continue with Climate Pact Even If US Pulls out
Currently, the United States has committed to reducing carbon emissions between 26 and 28 percent below 2005 levels by 2025. The "Paris accord" to reduce carbon emissions, was agreed in the 2015 , and signed by almost 200 countries.
US crude production has also continued to increase, rising to 9.34 million bbl/d, up almost 500,000 bbl/d from a year-ago. Oil exports from the country also reached over 1 million barrels a day in late May, according to Bernstein Research.
While weaker oil price broke another myth or fundamental understanding that a nine-month agreement between the OPEC and N-OPEC countries would immediately boost oil price, it has broken many such myths over the past years and understanding them or at least recognizing them is of utmost importance if one looks to forecast the future price.
USA drillers this week added 11 rigs, in a record stretch of 20 straight weeks of additions, data from energy services company Baker Hughes showed.
"Too early to say when production caps could be imposed on Libya and Nigeria, they have a lot of issues to solve", he told Reuters. Speculators fled bearish positions for a second week.
Russia's most powerful oil boss said the deal between OPEC and its partners to curb output won't stabilize the crude market over the long term as US shale fills the supply shortfall.