Fresh US drilling capping crude oil price: OPEC

More signs of recovery in US shale oil basins and indications of a build in inventories sent crude oil prices lower early Wednesday.

In response, at 3:50pm GMT, the Brent front month futures contract was up 0.39% or 22 cents to $56.19 per barrel, while the West Texas Intermediate was 0.47% or 25 cents higher at $53.45 per barrel.

Crude stocks at the Cushing, Oklahoma, delivery hub for USA crude futures fell by 702,000 barrels and US crude imports by 1.34 million barrels per day, the EIA said.

Distillate inventories fell by 700,000 barrels last week and remain above the upper limit of the average range for this time of year.

Since Adam was a boy, Opec and (some) member country ministers have conjured up the bogeyman of speculators and money managers to explain away uncomfortable prices - high or low.

In all, the 10 OPEC members covered by the agreement achieved 1.14 million b/d in cuts in January, according to the Platts analysis - taking just more than a North-Dakota's worth of production off the market, though increases by the exempt countries have blunted some of the impact. On a yearly basis, however, it will grow by only 24,000 BPD, to average 6.80 MMBPD compared with a year earlier when it totaled 6.78 MMBPD. Will production in the USA ramp up in response? Supplies in the USA have steadily increased this year - potentially undermining efforts by the Organization of the Petroleum Exporting Countries and other producers like Russian Federation to boost prices by cutting production. "A floor is being formed by the production reduction agreed by OPEC and several non-OPEC oil producers".

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That's a "record initial compliance rate of 90%", the IEA said, adding that some producers, notably Saudi Arabia, appeared to have cut by more than required.

"Improve on compliance, cut production further and extend the deal for the second half of the year if you want to avoid yet another year of global oil inventory builds".

Bears continue to point to increased U.S. oil rig activity, and uncertainty surrounding policies of U.S. President Donald Trump, said Stuart Ive, a private client advisor at OM Financial. Demand for gasoline in the US sits at 8.43 million barrels per day.

The United States Oil Fund (USO) is down fractionally today, and is off by 1% this week. Also, Russia has cut production by only 100,000 bpd, as opposed to the promised 300,000 bpd.

Some analysts say oil producers will have to reduce production more quickly to drain the global oversupply this year.

Many market players have taken a wait-and-see stance.

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