Oil Prices Give Up Gains As Crude Supply, Production Rise


US crude futures fell 0.8% to $60.23 a barrel, with Brent crude down 0.8% at $64.15.

The report stated that oil futures ended lower, adding that the sell-off in crude oil futures started early in the month with oil prices pulled lower, as major US stock markets declined sharply and the dollar firmed.

This suggests the efforts by OPEC and Russian Federation to clear the global oil glut by cutting supplies are not working as well as they expected.

Distillate stockpiles, which include diesel and heating oil, lost 4.4 million barrels, versus expectations for a 1.5 million-barrel draw, according to the EIA report.

Recently, we've seen signs that the crude oil rally may be over.

On Wednesday, the Labor Department is scheduled to release a separate report on producer prices in the month of February.

If sanctions are reinstated, Iran's oil exports could drop by 250,000 to 500,000 bpd by the end of this year, FGE said in a note. The uptick is expected to be driven by robust demand in industrialized nations, including Europe, the USA and Japan, the agency said. The thing is - while global oil demand is expected to reach 1.6 million barrels a day this year, more than previously projected, this can be covered by the 1.66 million barrels a day from sources outside OPEC.

The deal has helped boost oil prices LCOc1, which topped $71 a barrel this year for the first times since 2014 and were trading near $65 on Wednesday.

Read: Is OPEC moving the goalposts for the oil market?

Adherence by the 12 OPEC members with output targets rose to 147 percent, according to a Reuters calculation based on the OPEC figures, higher than 137 percent in January based on last month's report.

Due largely to the rise in USA output, estimates by the EIA show global supplies will exceed 100 million bpd for the first time in the second quarter of 2018, while demand will only break through that level in the third quarter, implying a slightly oversupplied market.

But since OPEC expects demand this year to grow by only 1.62 million bpd, that would leave the market slightly oversupplied and may require more or longer supply restraint.

The IEA estimates Brent averaging around $67 a barrel in 2018, with prices now up roughly 20% more than this time previous year.

OPEC is now talking of looking at other metrics to assess the market's rate of return to balance.