Higher US crude output to cap oil prices through 2018

"As long as you've got those builds in gasoline, it is going to be hard for crude oil to rally", said Olivier Jakob, energy market strategist at Petromatrix in Zug, Switzerland.

"A bigger than expected drop in oil and fuel stocks received the initial bullish attention".

Bloomberg News reports that OPEC and other oil producers taking part in output cuts have reached a consensus to extend the limits until the end of the year, oil ministers for two of the group's members said.

The oil producers will meet on May 25 in Vienna to discuss the possibility of extension. The twelve member states will be joined by Russian Federation, but U.S. production remains a concern.

In its monthly oil market report (MOMR), OPEC said the United States oil and gas companies have already stepped up activities in 2017 as they start to increase their spending amid a recovery in oil prices.

Oil prices fell, rattled by concern over slowing demand, a rising U.S. dollar and increasing USA crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.

Oil prices have plummeted from around $100 a barrel in 2014 to less than $50 now after a spike the USA shale oil production. WTI crude oil averaged $43.33 a barrel in 2016 and is forecast to rise to an average of $50.68 in 2017, down $1.56 a barrel compared with last month's estimate for 2017.

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However, U.S. production rose, and refining runs declined, giving analysts pause about the market's sharp rise.

The energy component was already trading higher on Wednesday after data released by the American Petroleum Institute late Tuesday showed USA inventories fell by 5.79 million barrels.

Shipments data has shown signs of drawdown, with shipments from OPEC countries expected to fall about 50 million barrels in April, according to Thomson Reuters.

Saudi Arabia increased output by about 50,000 bpd, according to the secondary sources and Saudi figures, although Riyadh continues to produce less than agreed under the deal.

Rising pump prices have followed on higher prices for crude oil.

Saudi Arabia's energy minister, Khalid al-Falih, said on Monday he expected Opec to agree to extend an agreement to limit oil production to the end of the year or possibly longer. Production fell in the UAE, Libya, Iraq and Iran, but rose in Saudi Arabia and Angola, with Saudi Arabia's output up almost 50,000 barrels a day.

"U.S. crude oil production is now solidly above 9.3 million barrels per day with more to come, and refined product, especially for gasoline, is oddly weak", John Kilduff, the partner at hedge fund Again Capital in NY, told Reuters.

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