Oil fell to a two-week low on Wednesday, after a surprising build in USA gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut. Andrew Lipow, president of Lipow Oil Associates in Houston, said some in the market were concerned about the rapid recovery in shale production."Perhaps the amount coming out of the ground might be more than we anticipate", he said.
Iran was allowed to increase its output under the deal as the nation rebuilds from worldwide sanctions that pressured its energy industry. The decline was mainly due to the surprise build in US gasoline stockpiles that point to weaker-than-expected demand at a time when consumption of gasoline usually rises.
U.S. Oil prices were down almost 4% through the afternoon on Wednesday and now hover just above the $50 a barrel mark. WTI tumbled 4% on Wednesday following a smaller than expected drawdown in oil inventories and the first jump in gasoline supplies in several months.
"The market sentiment appears to be that the increase in USA shale production outweighs the OPEC action and the market is keeping the loss we had yesterday", he said.
U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 1 million barrels from the previous week, the Energy Information Administration (EIA) said in its Weekly Petroleum Status Report.
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But doubts began to emerge soon afterward that not all such armaments or production facilities were declared and destroyed. Iran and Hezbollah, both bitter enemies of Israel, along with Russian Federation have sent forces to support Assad.
At a press conference in the United Arab Emirates, Saudi Energy Minister Khalid al-Falih said that "there is consensus building but it's not done yet".
Saudi oil production in February was 10.011 million bpd, and that's the same figure the Saudis had reported to OPEC for their production that month.
"At 532.3 million barrels, USA crude oil inventories are near the upper limit of the average range for this time of year".
Traders said that the rising USA crude production posed a concern that the oil supply overhang would continue, while the jump in gasoline stocks implied a stutter in demand. Distillate stocks reached their lowest levels since November 2015, the EIA said.
Oil prices are on pace for their biggest daily percentage decline since early March, and USA crude oil production is expected to rise in both 2017 and 2018.