Shale oil boom to hurt OPEC well into 2018

It is important to note that gasoline stockpiles rose by a surprising 2.1 million barrels (considering the decline), compared to an expectation of 457,000 gallon drawdown as, it seems, Americans are spending more time traveling to vacations within North America. Motor-fuel stockpiles expanded by 2.1 million barrels last week, the Energy Information Administration reported.

"Production growth in Libya and Nigeria and continued rig additions in USA are complicating the picture, raising doubts on OPEC's strategy". Additionally, the IEA projects that non-OPEC nations collectively will expand their output by 700,000 B/D in 2017 and 1.5 million B/D in 2018, slightly more than the forecasted growth in global demand.

Shale supply has pushed USA crude production up by about 10 percent over the a year ago to 9.3 million bpd - not far below the output of top exporter Saudi Arabia.

Crude futures fell sharply Wednesday on higher stockpiles in the USA and other rich nations despite the OPEC production deal.

Brent crude futures were at $46.92 per barrel at 0643 GMT, down 8 cents from their last close and after slumping almost 4 percent in the previous session.

Crude prices have fallen more than 10 percent since late May, pulled down by heavy global oversupply that has persisted despite a move led by the Organization of the Petroleum Exporting Countries to curb production.

With supplies plentiful, strong demand is needed to drive the market, but there are signs of a slowdown. But there is good reason to believe that oil prices will be capped.

West Texas Intermediate for July delivery was at US$44.42 a barrel on the New York Mercantile Exchange, down 4 cents, at 9:36am in Hong Kong. The contract lost 27 cents to $44.46 on Thursday, the lowest since November 14.

Brent for August settlement rose $0.44 to $47.36/bbl in London. Yet crude prices have slid about 12 percent since that day as other countries have boosted output.

Oil prices were resilient during the European session on Wednesday with WTI trading just above the $46.00 p/b level at the United States open. By its estimates, total crude oil inventories in industrialized economies are 292,000 barrels above the five-year average.

Supply from 11 OPEC members with production targets under the accord-all except Libya and Nigeria-averaged 29.729 million bbl/d last month, according to figures from secondary sources that OPEC uses to monitor output.