OPEC Output Increases, Saudi Arabia Seeks Solution

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Before the EIA report, benchmark West Texas Intermediate (WTI) crude for August delivery traded up about 2.5% at around $46.15 a barrel, and it slipped to around $46.10 (up 2.4%) shortly after the report's release.

"According to the latest official data, Opec increased production by 0.3m barrels per day largely on the back of growing exports out of Nigeria and Libya, undermining its own supply restriction strategy".

Even though the projected slowdown in U.S. oil extraction will provide some support to oil prices in the medium-term, USA production will be still near its record-highest, meaning the demand side of the energy market will be definitive in setting the oil prices the next year.

Crude oil prices remain under $50 a barrel.

The reduction will impact the allocations of crude oil to Europe, Asia, US and other major export destinations. As if brimming USA supplies were not enough, oil prices received another blow from Russian Federation.

USA oil production has jumped more than 10 percent over the previous year to 9.34 million bpd.

Nigeria has no set timeframe to join OPEC oil production cuts, its oil minister said on Wednesday.

Libya's production, meanwhile, this month was above 1 million bpd for the first time in four years.

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Saudi Arabia is the largest crude oil producer and exporter among OPEC members.

The cartel said the world will need 32.20 million barrels per day (bpd) of crude from its members next year, down 60,000 bpd from this year. Commercial crude levels, at 495 million barrels, are still 0.9% higher than they were a year ago, according to EIA data.

Oil ministers from 5 countries monitoring the deal with Saudi Arabia will meet on July 24 in Russian Federation, when they may recommend some adjustment in the pact but won't discuss the possibility of further cut at its regular meeting.

The US could quadruple its crude oil exports by 2020 in a move that will seriously impact OPEC's hold on the global market. S&P has already downgraded Exxon Mobil, Royal Dutch Shell, Total, BP.

Saudi Arabia topped the cartel's list of exporters a year ago, sending of 7.5 million barrels overseas each day.

"The market right now is questioning the efficacy of OPEC's supply cuts", Tchilinguirian said.

Iraq's neighbor Iran, which under the agreement can increase its output to 4 million barrels per day, also added to its production volume, albeit by a modest 16,700, to 3.79 million bpd.