EIA Crude Oil Stocks change preview

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Analysts at S&P Global Platts expect US crude oil inventories to have fallen by 3.2 million barrels in the week ended May 26.

Even though the Organization of the Petroleum Exporting Countries and major non-cartel heavyweights such as Russian Federation last week extended the ongoing production cuts, it remains to be seen if such caps can effectively chip away the glut of oil that has haunted prices for more than two years.

Analysts predict USA crude oil could rise even faster as prices increase.

Gasoline stocks fell by 2.9 million barrels, compared with analysts' expectations in an economists' poll for a 1.1-million-barrel drop.

Production cuts are taking longer than expected to eliminate the surplus as USA shale drillers boost production with surprising speed.

With Libya's increased output, OPEC's production reached the highest level since October 2014, giving energy traders jitters over the oil production agreement, analysts said.

Official data showed crude inventories in the United States, the world's top oil consumer, fell sharply last week as refining and exports surged to record highs.

July WTI (West Texas Intermediate) crude oil (USO) (UCO) (XES) futures contracts trading in NYMEX fell 2.7% and closed at $48.32 per barrel on May 31, 2017. US production rose for the 14th time in 15 weeks, by 22,000 barrels a day to 9.34 million.

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Market analysts are troubled by a growth in USA crude production that is straining efforts from the Organization of the Petroleum Exporting Countries to reduce global oversupply. Brent LCOQ7, +1.30%, the global benchmark, rose 46 cents, or 0.9%, to $51.21 on ICE Futures Europe.

The American summer driving season, which by tradition started on the Memorial Day holiday on Monday, may offer some support for prices, Reuters quoted analysts as saying.

USA crude production has also continued to increase, rising to 9.34 million bbl/d, up almost 500,000 bbl/d from a year-ago.

That followed the American Petroleum Institute saying us crude supplies fell 8.7 million barrels last week by its count.

The President of the OPEC Conference and minister of energy of Saudi Arabia, Khalid Al- Falih, had said that the extension was necessary to further consolidate the gain by all stakeholders and the period would allow the market to achieve the five year average for stocks.

"Growth in oil production from United States shale acreages will remain a real threat that could scupper much of the benefits from output cuts by OPEC and some non-OPEC members", he said.

Rising output from Nigeria and Libya, which are exempted from the deal, is also undercutting oil producers' attempt to limit production.

Oil slid below $50 a barrel last week after the agreement by the Organization of Petroleum Exporting Countries and its allies to prolong output curbs for nine months disappointed some investors hoping for more.

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