Oil falls to 5-week low on unexpected USA gasoline stock build

Global oil output sees slowest growth since 2013

The U.S. West Texas Intermediate crude July contract was at $44.48 a barrel by 3:55AM ET (0755GMT), down 25 cents, or around 0.6%.

OPEC's pledge was to cut 1.8 million bpd in tandem with other key producers, including Russian Federation, for the first six months of the year. US inventories fell less than forecast last week, keeping supplies more than 100 MMbbl above the five-year average, according to data from the EIA on Wednesday. For OECD inventories to return to the normalized levels, OPEC needs to drain by 34 million barrels a month or 1 million barrels for the next 10 months.

Additionally, the International Energy Agency (IEA) said that the non-OPEC nations like Canada, Brazil and the United States will add about 1.5 million barrels of supply in 2018, which is higher than the expected demand growth of 1.4 million barrels.

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On Thursday, oil prices hit six-month lows.

If U.S. shale production continues to grow rapidly, OPEC will probably return to defending its market share in 2018, even if it means accepting lower oil prices.

Oil traded near the lowest closing level in seven months as USA gasoline supplies unexpectedly rose for a second week.

USA crude production has been steadily growing and last week rose to 9.33 million bpd, up 12,000 from the previous week, the EIA said.

The increase in USA gasoline inventories drove down RBOB futures by more than 4 per cent, tugging Brent and U.S. crude futures lower with them, analysts said.

The U.S. Energy Information Agency published a weekly report Wednesday showing gasoline inventories unexpectedly surged by 2.1 million barrels.

The U.S. oil boom will keep piling on the pain for OPEC well into next year. Prices slid $1.72, or 3.5 percent, to $47 Wednesday.

OPEC members Nigeria and Libya are exempted from the oil curb deal, and have raised their production, which largely undermined the oil cartel's efforts to rebalance the market.

Recent U.S. economic figures, including retail sales, core inflation and industrial production have all been weak, raising concerns about the trajectory of the economy.

Traders said the pessimism over the supply glut could put further pressure on prices, especially if inventory data doesn't show substantial progress toward rebalancing supply and demand in the next few months.

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