Oil prices drop amid glut concerns, climate deal pullout

GETTYOil prices will influenced by supply from US shale

Oil prices extended gains on Thursday after government data showed a larger-than-expected drop in US crude inventories as refinery activity increased and crude imports fell.

A crude price in the $50s is the new reality for bosses of some of the world's largest producers as output caps from Organisation of Petroleum Exporting Countries (Opec) and its allies are balanced out by rising U.S. shale. "If for some reason we need to do more, we will consider doing more including. bigger cuts".

A week ago, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC members met in Vienna to roll over the output cut deal to reduce 1.8 million barrels per day (bpd) until the end of next March.

"US oil production has grown faster at 50 United States dollars than any analysts in the market predicted", Bjørnar Tonhaugen, Rystad's vice president of oil markets, said in a statement.

"Our joint declaration with Russian Federation concluded that while the rebalancing goal is on its way to being achieved, more needed to be done to draw inventories toward the five-year average", Falih said.

Trump's withdrawal from the Paris agreement, the landmark 2015 global pact to fight climate change, drew condemnation from Washington's allies and many in the energy industry - and sparked fears that USA oil production could expand more rapidly than it is now.

Inventories fell by 6.43 million barrels last week, according to Energy Information Administration data, more than double the median estimate in a Bloomberg survey.

The general trend among USA producers points to a need to boost growth forecasts amid anticipated production acceleration the second half of this year, said consultancy Energy Aspects.




USA crude production has also continued to increase, rising to 9.34 million bbl/d, up almost 500,000 bbl/d from a year-ago.

Libya, an OPEC nation that's exempt from the production-cut deal, is said to have increased its output to 3-year highs of late.

Both OPEC and non-OPEC producers reached an agreement last week to extend the production cuts they had set past year by nine more months.

"Investors continue to doubt the ability of OPEC to rebalance the oil market, with crude oil prices remaining under pressure amid further signs of rising USA oil production", ANZ bank said on Monday.

Oilfield services firm Baker Hughes on Friday reported its weekly count of oil rigs rose for a 20th straight week.

That has the market really concerned and each weekly rise in the number of active rigs in use in the United States adds to the concern and pressures on prices.

Libya's oil production has risen to 827,000 bpd, climbing above a three-year peak of 800,000 bpd reached earlier in May, the National Oil Corporation said, after a technical issue that hit Sharara oilfield was resolved.

USA producers aren't part of the output agreement.

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