Oil prices struggle on doubts OPEC can rein in oversupply

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In a report on Wednesday, the International Energy Agency said rising USA output will contribute to supply growth exceeding demand growth in 2018.

That suggests that the global crude oil market has got some support from the efforts of the Organization of the Petroleum Exporting Countries (Opec) and non-Opec oil producers to cut production.

Adding to the supply surplus is rising USA production from shale drillers that has pushed US output up by 10 percent over the previous year to 9.3 million bpd, not far below levels by top exporter Saudi Arabia, Reuters reported.

Oil has slumped despite output cuts of 1.8 million barrels a day by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russian Federation.

The International Energy Agency (IEA) warned on Wednesday that oil supply would outstrip demand next year, with output from the United States especially expected to make it hard to sop up the stubborn world oil glut.

In May, OPEC decided along with Russian Federation and other non-members to extend production cuts that began in January until March 2018.

"Oil has been weighed down by the market's impatience with the generally slow pace of the global inventory drawdown amid a significant recovery in global oil supplies, particularly from the US", OPEC said in its June report today.

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Oil prices hovered near their lowest levels in seven months early on Thursday, hurt by high global inventories and doubts over OPEC's ability to implement production cuts.

The increase in USA gasoline inventories drove down RBOB futures by more than 4 percent, tugging Brent and US crude futures lower with them, analysts said. Commercial crude oil inventories also fell less than projected, highlighting weak demand even as the USA enters its summer driving season, when many vacationers take to the roads. Production rose by 12,000 barrels a day to 9.33 million barrels a day.

"Patience is required on the part of those looking for the rebalancing of the oil market, and new data leads us to repeat the message", the IEA said.

Meanwhile, U.S. drilling activity has continued apace RIG-OL-USA-BHI, driving up U.S. output C-OUT-T-EIA by more than 10 percent since mid-2016 to above 9.3 million bpd. Production across OPEC rose by about 336,100 barrels per day to 32.1 million bpd, according to secondary sources, led by increases from Libya and Nigeria, which are exempt from the deal, and Iraq, CNBC reported.

OPEC and 11 allies agreed on May 25 to prolong their deal to April 1, after judging that curbs made in the first half of this year wouldn't be enough to reduce oil inventories in developed nations to their five-year average.

OPEC now expects US production to increase by 800,000 bpd in 2017.

The International Energy Agency on Wednesday said it expected growth in non-OPEC supply to be higher next year than growth in overall global demand.