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A sense of OPEC divisions a blow to oil prices

A sense of OPEC divisions a blow to oil prices

"The relentless increase in U.S. oil production appears to have the market anxious that the Opec cuts will be completely nullified by the increased United States production", William O'Loughlin, analyst at Australia's Rivkin Securities, wrote in a note to clients on Tuesday.

US crude production will average more than 10 million barrels a day for the first time in 2018, breaking a record nearly five decades old and keeping prices from rising as much as previously estimated, government forecasts showed Tuesday.

Here's a chart showing the level of USA crude oil inventories by days of supply, courtesy of the Commonwealth Bank, comparing where it now sits compared to the levels of recent years.

Qatar produces about 620,000 barrels of crude per day (bpd), making it one of the smallest producers in the Organization of the Petroleum Exporting Countries.

Brent crude was trading at US$49.27 per barrel at 0424 GMT, down 20 cents, or 0.4 per cent from its last close.

USA stocks of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell, the Energy Information Administration (EIA) said June 7. The 1.8 million barrel a day reduction was enacted to drive the price of oil up and make the industry more profitable to OPEC producers.

Oil prices slipped further below $50 a barrel on Tuesday on concerns that a diplomatic rift between Qatar and several Arab states including Saudi Arabia could undermine efforts by OPEC to tighten the market. Crude slid to its lowest level since May 9, with US benchmark futures down more than 10 percent in 10 days of trading. Libya and Nigeria's combined January-May average output of 2.312 million barrels per day is now 101,000 barrels per day higher than their October levels, the benchmark month against which the rest of OPEC members' cuts are determined, according to the S&P Global Platts survey.

The surge in USA exports began in January, the first month of OPEC's cuts.

Despite the rebound in oil prices, Kilduff said prices need to rise significantly higher to post a close that would signal oil bulls are in control of the market.

Inventories of US crude rose by roughly 3.3m barrels in the week ended May 26, confounding expectations of draw of around 3.5m barrels.

Last year OPEC announced a momentous deal between its member nations and some non-OPEC producers to reduce their oil output.

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