OPEC Faces 'Long Haul' to Deplete Swollen Oil Stocks, IEA Says

OPEC Faces 'Long Haul' to Deplete Swollen Oil Stocks, IEA Says”

"We're on the precipice of a large sell-off", he said.

The American Petroleum Institute will issue its weekly USA oil inventory data at 4:30 p.m. EDT, ahead of the US government's official report on Wednesday. "If not, prices are likely to drop below $51 and test $50 again".

On the balance situation, a survey of analysts from S&P Global Platts revealed expectations of a 3.6 million drop in USA crude oil inventories and a 400,000 barrel decline for gasoline.

On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7% at $47.87 a barrel.

The weekly USA crude inventory report from the industry group American Petroleum Institute (API) is due out later on Tuesday.

In May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension.

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"The market took this as a mildly bullish report", said William O'Loughlin, investment analyst at Rivkin Securities.

The survey also showed expectations for declines of 400,000 barrels for gasoline stockpiles and 700,000 barrels for distillates, which include heating oil.

More broadly, analysts said ample supply was preventing prices from moving much higher.

The recent OPEC/non-OPEC capacity cuts have meant that India has had to diversify its crude suppliers, with state-run refiners making purchases of USA crude grades.

The bearish compliance data comes a day after OPEC released its monthly report, showing production from the group rose further in July, led by gains in Libya and Nigeria, two members exempt from the cuts, and top exporter Saudi Arabia. Production at shale fields is forecast to expand to 6.15 million barrels a day in September, according to a report from the Energy Information Administration. Even so, Citigroup Inc.'s Ed Morse says shale will win over OPEC on oil, as US drillers can survive due to hedging.

API is reporting industry data later on Tuesday, with the closely-watched EIA inventory report due out on Wednesday. Crude supplies at Cushing, Okla., the delivery point for WTI and the biggest USA oil-storage hub, rose 700,000 bbl last week, according to a Bloomberg-compiled forecast. "We had seen in the past few weeks that demand growth was robust, and this turned that on its head".

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