Oil Slips as US Gasoline Stockpiles Climb, Crude Supplies Drop

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A global crude glut has persisted even as the Organization of the Petroleum Exporting Countries and other producing countries have worked to reduce output under an agreement to cut supplies nearly 1.8 million barrels per day in the first half of 2017.

He said the UAE was satisfied by the high level of compliance with the current agreement by OPEC and non-OPEC countries to cut back oil production, and that this compliance would have a direct bearing on the general positive movement of non-OPEC partners in the agreement.

Inventories have been heading back down in the USA and dropped by 1 million barrels in the latest week, the Energy Information Administration said Wednesday, a smaller drop than expected. The EIA added that total motor gasoline inventories increased by 1.5 million barrels last week and are now near the upper limit of the average range.

Oil edged lower on Wednesday, after USA data showed a smaller-than-expected decline in overall crude inventories coupled with another rise in production, hindering OPEC's efforts to reduce a global surplus of crude.

Oil edged lower after a report showed USA gasoline supplies increased for the first time in nine weeks even as crude stockpiles dropped.

Brent crude futures dipped 18 cents at $54.71 a barrel as of 15:16 GMT, while USA crude futures lost 19 cents to $52.22 a barrel.

US supplies of crude are still near records and more than 100 million barrels higher than the five-year average for this time of the year, data compiled from the EIA show. Brent crude settled down 3.6 percent, or $1.96 a barrel, to $52.93.

The spread between crude oil inventories and the five-year average started to widen in January 2015 after it broke four-year highs and hit record levels. U.S. production rose to 9.252 million barrels a day in the most recent week, highest since August 2015.

Oil fell to a two-week low on Wednesday, after a surprising build in US gasoline inventories and a rise in domestic crude output that is partially offsetting cutbacks by other countries trying to reduce a global glut.

On the demand side, last week the International Energy Agency (IEA) downgraded global oil demand growth for this year, dropping its estimate to 1.3 million bpd.

Moscow has not stated whether it supports prolonging the curbs, although Energy Minister Alexander Novak said this month that Russian Federation would soon start consultations with its own oil producers about the possibility of doing so. The United States and allies lifted certain sanctions against Iran in late 2015 allowed Tehran to more than double its crude exports over 2016.

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