OPEC sees more oil supply outside the group, countering its cuts

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The announcement will likely boost to oil prices, which yesterday jumped on reports from the American Petroleum Institute and the Energy Information Administration, which both estimated US crude oil inventories to have fallen by more than 5 million barrels in the week to May 5.U.S. WTI crude CLc1 was up 23 cents, or 0.5 percent, at $46.11 a barrel.United States crude stockpiles posted their biggest weekly drawdown since December last week as imports dropped sharply, while inventories of refined products also fell.In its monthly oil market report (MOMR), OPEC said the U.S. oil and gas companies have already stepped up activities in 2017 as they start to increase their spending amid a recovery in oil prices.OPEC is expected to decide at talks on May 25 whether to extend the current deal to cut production for an additional six-months to the end of the year.While US oil inventories fell, the country’s crude oil production continued to rise, jumping above 9.3-million barrels a day last week, in what is now a more than 10% increase since its mid-2016 trough.OPEC meets later this month.WTI was on track to post its best performance since November 30, the day the Organization of the Petroleum Exporting Countries agreed to cut their production to reduce brimming global crude stockpiles.Brent crude has endured a volatile past few years, plummeting from more than $100 a barrel in 2014 to less than $30 last year.Refinery crude runs USOICR=ECI fell 418,000 bpd and utilization rates USOIRU=ECI dropped by 1.8 percentage points to 91.5 percent of overall capacity, after hitting a record 94.1 percent three weeks earlier, EIA data showed. At 522.5-million barrels, crude stocks were the lowest since February.Nigeria, which along with Libya is exempt from OPEC cuts, is also expected to see a jump in output soon as Shell tests the Trans Forcados oil export pipeline before it restarts.Prices surged immediately after the agreement, but have come under sustained pressure in recent weeks as US production has ramped up and pushed back the expected timing for when the oil market will come into balance. The number of drilling rigs operating in the country has more than doubled since May, data from Baker Hughes Inc. shows, as shale explorers emerge from a two-year rout buoyed by the initial price gains after OPEC announced its plan.