Oil prices fall to three month-low amid growing USA supply

OPEC said in the report oil stocks in industrialized nations rose in January to stand 278 million barrels above the five-year average, of which the surplus in crude was 209 million barrels and the rest refined products.

Then in December, non-OPEC producers led by Russian Federation agreed to cut their own output to 558,000 bpd.

Gains made since Opec announced output cuts late a year ago have almost all been erased.

In its widely-watched monthly oil market report, the Paris-based energy watchdog for rich countries said that compliance by Opec with its output cutting deal was 98 per cent last month, but only about 37 per cent by the 11 non-Opec member countries that joined in the deal.

The US Energy Information Administration Wednesday said commercial crude stocks in the country dropped by 237,000 barrels in the week ended March 10, which though relatively modest, ended a stubborn streak of nine consecutive weekly builds and also reinforced the American Petroleum Institute's data a day earlier showing a 531,000-barrel decline.

OPEC increased output by 170,000 bpd to 32 million bpd and non-OPEC oil production increased by 90,000 bpd to 57.8 million bpd, largely due to higher USA output.

The de-facto leader of OPEC issued a rare statement Tuesday night, saying that it was "committed and determined to stabilizing the global oil market".

Secondary OPEC sources also showed that output from Saudi Arabia was down about 68,100 barrels to 9.797 million barrels a day in February. "Indeed, we think it is now more likely than not that there will be some sort of extension to the deal to ensure that stocks are drawn down to more normal levels". This drop has further increased speculation whether the deal should or would be extended beyond its original expiry date at end-June, given the rise in United States shale.

Angola pumped 1.659 million b/d in January higher than 1.641 million b/d last month, the report also showed.

With news of an imminent oversupply, there is a risk of oil prices dropping to $45 a barrel due to increases in shale oil production, Issam Almarzooq, Kuwait's oil minister told Bloomberg.

Stat of the day comes from the EIA, which shows that crude by rail in the US averaged 477,000 bpd last year (including shipments from Canada), down from 754,000 in the year prior. The drop from the US$55 range comes after the Riyadh government announced that it will extract more than 10 million barrels per year.

Then, they were 48 million barrels higher at just over 3 billion barrels, with Europe stocks rising and the USA levels near a record.

There is "no way" OPEC would allow Iraq to increase production by 500,000 barrels a day in the middle of coordinated production cuts, Croft said.

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