Crude output from Opec nations rose by 290,000 bpd in May to a 2017 high of 32.08 million bpd, still within the confines of the supply deal, after comebacks in Libya and Nigeria, which are exempt from cuts.
American Petroleum Institute data highlighted a rise of 2.8 million barrels in the U.S. stocks in the week ending 9 June to 511.4 million.
That comes as oil demand accelerates in the second half of the year, though total consumption is largely in line with the seasonal average.
"The market has weakened on the API data", said David Lennox, a resource analyst at Fat Prophets in Sydney.
The flow surge should show up in us imports data sometime in late July.
The agency repeated the advice it has given in previous reports, that those hoping for the market to come back into supply-demand balance should expect it to take some time on current policy.
In its first forecast for 2018, the International Energy Agency said Wednesday it expected countries outside the cartel to increase production by about 1.5 million barrels per day, outstripping the growth in global demand.
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Brent crude, the global oil benchmark, fell 0.74% to $48.36 a barrel on London's ICE Futures exchange.
"Abu Dhabi swiftly enforced a ban on oil tankers linked to Qatar calling at ports in the UAE, which could lead to a backlog of cargos and increased shipping costs", the report says.
OPEC and 11 rival exporters including Russian Federation have agreed toextend an existing deal to limit supply by 1.8 million bpd toMarch 2018, in order to cut global inventory levels.
Ross said surplus oil stocks were being drawn down, "but not at the rate Opec would like to see" because of U.S. production. This upward adjustment was mainly due to the downward revision in non-OPEC supply as world oil demand remained unchanged.
"While the demand is robust, there is a serious likelihood that prices will sink next year to $30-$35 a barrel and will stay there for a while", Fesharaki added. In short, whenever oil demand rises and prices go up, it will be met by increased supply from the US.
The IEA also forecast U.S. crude supply to grow by 430,000 bpd in 2017, and by 780,000 bpd in 2018, with many forecasting United States production to cap 10m bpd next year. The EIA is forecast to report crude stockpiles slid 2.45 million barrels and motor fuel inventories dropped by 1.15 million barrels, according to the median estimate in the Bloomberg survey.
In some of parts of the world, the stocks of oil are on record highs, and producers who are not a part of OPEC deal are ready to increase output.