OPEC asks United States to cut oil output and prosper global economy

An oil derrick operated by Raven Drilling drills for oil in the Bakken shale formation outside Watford City North Dakota

OPEC on Thursday sharply raised its forecast for oil supply from non-member countries in 2017 as higher prices encourage USA shale drillers to pump more, hampering OPEC efforts to clear a glut and support prices by cutting its output.

The oil nations decided late past year on an output cut of 1.8 million barrels per day (bpd) to reduce global oil inventories.

After edging higher ahead into early U.S. trading on Wednesday, oil prices moved sharply higher following the latest EIA inventories data.

Brent futures LCOc1 were up 19 cents, or 0.4 percent, at $48.92 a barrel at 0612 GMT.

But analysts said gains were capped by a build in US gasoline stockpiles which partly offset the fall in crude inventories.

WTI also fell 1.2 percent in the previous session, and the closing price for both contracts on Tuesday was the second lowest since November 29, the day before the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production during the first half of 2017.

The May report also changes to the EIA's earlier estimates for crude oil and refined product pricing for 2017.

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The higher prices were a result of top exporter and de facto OPEC leader Saudi Arabia saying on Monday it would "do whatever it takes" to rebalance a market that has been dogged by oversupply for over two years, resulting in crude prices below $50 per barrel.

Industry group American Petroleum Institute reported that crude prices also gained support by the fall in United States inventory, a 5.8 million barrel decline.

Iraq - OPEC's second-largest producer and a country that relies on oil revenues for almost 95 percent of its budget - committed to reduce daily production by 210,000 barrels to 4.351 million. Economists were anticipating a drop of 2 million barrels, according to Bloomberg. July brent crude futures on London's ICE Futures exchange picked up 55 cents, or 1.1%, to $50.77 a barrel.

Also supporting prices were comments from Algeria's energy minister that Algeria and Iraq favor extending global supply cuts when OPEC meets this month.

BMI said that "continued output growth. particularly in the US" would cap price upside gains from the supply cuts, adding that it expected average 2017 prices of $57 a barrel for Brent and of $53.75 a barrel for WTI.

For 2018, oil demand is expected to increase by 300,000 bpd, down from a previously forecast rise of 340,000 bpd.

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