Oil falls to $46, Nigerian cargoes face competition

Global crude oil prices fell to the lowest in more than a month Wednesday after data from the Energy Information Administration said USA crude stocks fell by a much less-than-expected amount, raising questions about overall demand into the peak of the summer driving season. US West Texas Intermediate (WTI) crude futures were down 8 cents, or 0.2 per cent, at $44.38 per barrel.

According to the EIA, a slight tightening in production during quarter three of this year is forecast to lead to 32.5 million barrels per day by the end of the first quarter of 2018. USA crude was $1.52, or 3.3 percent, lower at $44.94. Gasoline inventories rose by 2.1 million barrels. Rather, it was the International Energy Agency's (IEA) new report that suggests that American oil supplies are going to exacerbate the problem producers are contending with in the market today: the global glut of crude.

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While this would not affect global inventories, restricting the amount of oil coming into the United States should theoretically bring down inventories in the much-watched market, if it weren't for Iraq's increased oil exports to the US.

Both crude oil benchmarks have lost all the gains made at the end of past year after the oil cartel agreed with other big producers to cut output in an effort to prop up prices.

However, the inventory increases reported last week by the API were confirmed by the EIA a day later, sending oil prices slumping 5% last Wednesday.

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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.

"The industry continues to turn a crude oil surplus into a gasoline and distillate product surplus", Andrew Lipow, president of Lipow Oil Associates in Houston said.

Prices have risen but OPEC's share of production is set to decline once more in both 2017 and 2018, which could force another change of strategy. Prices slid $1.72, or 3.5 percent, to $47 on Wednesday.

OPEC members Nigeria and Libya are exempted from the oil curb deal, and have raised their production, which largely undermined the oil cartel's efforts to rebalance the market. The production cuts were introduced at the start of 2017 in a bid to revive prices.

USA rig counts due later in the day on Friday could add further downward pressure.

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