LONDON: Oil prices fell on Wednesday on expectations that US producers would boost output, just as OPEC signalled that a global supply-reduction deal will shrink the oil glut this year. Brent crude futures, the international benchmark for oil prices, were down 75 cents $54.72 a barrel at 1230 GMT.
US West Texas Intermediate (WTI) crude oil futures were trading down 81 cents at $51.67 per barrel.
US shale production is set to snap a three-month decline in February, the US Energy Information Administration said on Tuesday, as energy firms boost drilling activity with crude prices hovering near 18-month highs. February production will edge up 40,750 barrels per day (bpd) to 4.748 million bpd, the EIA said. In January, it was expected to drop by 5,900 bpd. "It's the eternal question about the current flat price and what it does to US crude oil production," Petromatrix oil strategist Olivier Jakob said.
The Organization of the Petroleum Exporting Countries, excluding Indonesia, pumped 33.085 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, down 221,000 bpd from November, OPEC said in a monthly report on Wednesday.
OPEC cut its forecast of supply in 2017 from non-member countries following pledges by Russia and other non-members to join OPEC in limiting output.
OPEC now expects non-OPEC supply to rise by 120,000 bpd this year, down from growth of 300,000 bpd last month, despite an upwardly revised forecast of US supply.
Under the agreement, OPEC, Russia and other non-OPEC producers have pledged to cut oil output by nearly 1.8 million bpd, initially for six months, to bring supplies back in line with consumption. The output cuts agreed by OPEC and others are likely to come largely from field and refinery maintenance, BMI Research said in a note.
It said oil producers are expected to use lower volumes needed for domestic power generation in a bid to maintain export volumes.
"Sticking to output targets is important but export volumes from the participating countries are a much better indicator of how the cuts will affect the market," it said.
"Participating members are keen not to sacrifice vital export revenue so are trying to find ways to limit domestic crude usage in order to prioritise filling their contracts to foreign refiners."
A committee responsible for monitoring compliance with the agreement meets in Vienna on Jan. 21-22.
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