Global oil glut set to continue despite efforts to prop up price

Right on cue, US crude oil inventories fell last week, but the decline was less than expected, according to the weekly inventories report from the Energy Information Administration.

The U.S. Energy Information Administration (EIA) said gasoline inventories increased by 2.1 million barrels during the week ended June 9, while crude inventories decreased by 1.7 million barrels.

American refineries bought crude last week, because commercial stocks fell by 1.7 million barrels to 511.5 million, but it appears not much gasoline was sold because domestic demand remained low.

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%.

Crude prices have fallen around 13% since OPEC reached an agreement to extend its 1.2 million barrels per day in production cuts - which, when combined with commitment from non-members such as Russian Federation can reach 1.8 million barrels per day - into the first quarter of 2018.

Oil prices are rallying after trading around seven-month lows overnight amid concerns the Organisation of the Petroleum Exporting Countries' (Opec) output cuts are not doing enough to curb the global oversupply.

The price falls are due to ongoing high supplies despite the pledge to cut from within OPEC and because of rising output from the US.

The International Energy Agency (IEA) said this week that oil supplies next year would still outpace demand despite consumption hitting 100 million bpd for the first time. It was down 8 cents to $46.92 a barrel by 12:36 p.m. EDT (1636 GMT).

The analyst also said that the cartel should have "done more" at its meeting last month, and added that he thought it was in for a period of "perpetual [production] cuts". Prices are down 2.6 percent this week.

"Demand is not as strong as expected and supply continues to increase despite softer prices", said Michael McCarthy, a chief market strategist at CMC Markets in Sydney.

But adherence to the cuts is under scrutiny and the producer group said this week that its output rose by 336,000 bpd in May to 32.14 million bpd.

But OPEC members Nigeria and Libya, which are exempt from the deal, have increased exports as they bounce back from supply disruptions caused by protests, rebel activity and mismanagement.