Oil prices fall on OPEC output increase, rising US crude stocks

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Oil prices have fallen after industry data reported an increase in U.S. crude inventory and OPEC announced a rise in production levels despite the ongoing output cuts deal.

US crude futures fell by 1% to trade at $45.97 a barrel after the report was released.

Reports of an increase in OPEC's output by 335,000 barrels per day (bpd), due to increases by Nigeria and Libya, both of which are exempt from production cuts is invalidating the efforts of Saudi Arabia to balance the markets.

The IEA also forecast U.S. crude supply to grow by 430,000 bpd in 2017, and by 780,000 bpd in 2018, with many forecasting United States production to cap 10m bpd next year.

Oil prices have fallen by about 10% since Opec and non-member countries including Russian Federation recently agreed to extend production cuts until the end of March 2018. "India's $2-trillion economy imports more than 80 percent of its crude requirement and the International Energy Agency expects it to be the fastest-growing consumer through 2040".

Meanwhile, the EIA has reported that shale production in the USA would reach an all-time high in July, at 5.475 million bpd and adding an additional rig to bring the total rig count to 719, continuing the twenty-two-week streak.

And they have racked up production as prices rise.

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"This is very unusual for this time of the year, when gasoline demand is supposed to pick up", said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany.

The IEA report came a day after OPEC's monthly oil report (http://www.marketwatch.com/story/opec-oil-production-rose-in-may-owed-to-unexpected-boost-from-iraq-2017-06-13), which showed that the group's output rose 1% in May from April amid gains in Iraq, Nigeria and Libya.

OPEC's plan to cut production and support prices is likely to be undone by increased output in the USA, the International Energy Agency predicted Wednesday.

The agency continued to forecast an implied shortfall insupply relative to demand for the second quarter of this year.But it said slowing demand growth in China and Europe inparticular, as well as increasing supply, meant the deficitshould narrow to 500,000 bpd from a prior estimate of 700,000.

US crude imports fell last week by 481,000 barrels per day. Resurgent US tight oil production has been regarded as the biggest threat to its efforts. At 511.5 million barrels, USA inventories remain in the upper half of the average range for this time of year.

The U.S. alone will account for about half that increase in supply, the IEA said.