Oil prices dip as supplies remain ample despite production cuts

July Brent crude LCON7, -0.79% on London’s ICE Futures exchange fell $0.41, or 0.8%, to $51.24 a barrel.

It stands in contrast to industry data from the American Petroleum Institute, which reported yesterday that oil inventories rose more than 800,000 barrels.

Crude oil prices rose Wednesday, after US data showed that stockpiles of oil and fuel continued to drop and oil production fell for the first time since February.

Data from the government’s Energy Information Agency, which is seen as more complete, is due later on Wednesday.

“The vulnerability of OPEC’s. rhetoric was starkly revealed. with both Brent and WTI falling.as the U.S. API crude inventories showed an unexpected increase”, said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Brent reached $52.63 a barrel and WTI rose as high as $49.66 on Monday after Saudi Arabia and Russian Federation agreed on the need to extend output curbs by members of the Organization of the Petroleum Exporting Countries and other producers.

OPEC is increasingly expected to extend the current deal to cut production at its meeting next week amid growing support for a deal extension from OPEC nations such as Kuwait, Iraq, Oman and Venezuela.

Jefferies bank said it was lowering its oil price forecasts due to the rise in U.S. production, cutting its Brent price estimate for the second half of 2017 to $59 per barrel from $61 previously.

But Michael Dei-Michei, head of research at JBC Energy in Vienna, said the market should consider that intermediate products – gas oils, diesel oil and other products – are not featured in the headline EIA numbers, and those stocks are rising, which could lead to higher finished product inventories.

Jefferies bank said it was lowering its oil price forecasts due to a surprisingly strong rise in US production.

“The agreement by OPEC to extend cuts into 2018 is critical”, said AB Bernstein in a note.

United States crude production has climbed 10 percent since mid-2016 to 9,3-million bpd, close to top producers Russian Federation and Saudi Arabia.

Rebalancing the global oil glut is going to take more than a temporary pullback by the world’s largest producers because US unconventional production is overwhelming any shortfall and coming back faster than anticipated, the International Energy Agency said.

North Sea oil output, generally seen in terminal decline, is expected to jump by a net 400 000 bpd in the next two years with new projects and greater efficiencies.