U.S. crude stocks fell 1 million barrels in the latest week, according to the U.S. Energy Information Administration, less than anticipated.
Output from the Permian play, the country's largest shale region, was expected to reach a record 2.36 million bpd.Global benchmark Brent crude futures fell 11 cents, trading at $55.25 a barrel by 11:13 a.m. EDT (1513 GMT).
In November last year, OPEC and other producers, including Russian Federation, agreed to cut output by about 1.8 million barrels per day (bpd) during the first half of this year. United States production rose to 9.252 million barrels a day in the most recent week, highest since August 2015.
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.
If the high level of compliance from the OPEC continues, the global crude oil stock draw can increase to 1 million bpd in the second quarter of this year, according to Matthew Parry, senior oil economist at the IEA, reports Market Watch.
Global benchmark Brent crude futures swooned as low as $54.61, the lowest since 7 April, then settled down 47 cents at $54.89 a barrel.
Iran has indicated its support for extending a crucial oil output agreement by world's biggest producers that helped stabilize prices in markets since its implementation early this year. Oil is now trading at $53.43 in a light trading volume, near support 53.01.
The ministerial monitoring committee was set up under the OPEC to track implementation of the agreement on crude production cut by OPEC and non-OPEC countries.
Saudi Arabia, Iraq and Kuwait believe $60 a barrel will lift their economies and allow for more energy-industry investment, the officials said, without jumpstarting too much American shale output, which can be ramped up and down with prices more easily than most oil production. The kingdom boosted production to 10 million barrels a day from 9.7 million a day, the data show.
More barrels could be on their way to market from USA shale fields as financial companies are investing billions in production, a Reuters analysis shows. Additionally there is hope that the production cuts may be extended beyond June which is lifting prices.
A surge in USA production is a major threat to OPEC's effort to reset the still-oversupplied global oil market.