The bulk of new oil entering the market will come from US shale fields, who are all taking advantage of higher oil prices that makes it more lucrative to proceed with new oil rigs and investing in shale fields.
The International Energy Agency is forecasting USA output to grow by 620,000 bpd in 2017, compared with a prediction that production would be flat in its November assessment.
The International Energy Agency stated that it expects oil supplies to be higher than demand in the next year, despite a rise in global consumption. U.S. West Texas Intermediate (WTI) crude futures were at $44.74 per barrel, up 28 cents.
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"We're just not seeing inventories drop at the rate that OPEC needs to meet its target and to support prices, and there's increasing evidence that it's not going to happen at the current production levels", James Williams, economist at London, Arkansas-based energy-research firm WTRG Economics, said by telephone.
According to Platts, Nigeria will experience a slight surge in price of Brent crude, despite the recent increase in supply of crude oil globally, a development, which has threatened cut in oil production introduced by the Organisation of Petroleum Exporting Countries (OPEC) for its members.
"Yesterday's EIA numbers really come down to unleaded gasoline". Total volume traded was about 46 percent above the 100-day average. Most analysts surveyed by Bloomberg had forecast a decline. Prices dropped $US1.73 to $US44.73 on Wednesday, the lowest close since November 14.
Crude prices have fallen about 12% since May 25, when Opec agreed to extend its output limits into 2018. But adherence to the cuts is under scrutiny and the producer group said this week its output rose by 336,000 bpd in May to 32.14 million bpd.
"The outlook for oil hinges on the effectiveness of the Opec cuts relative to the supply increases from U.S. shale", said William O'Loughlin, analyst at Australia's Rivkin Securities.