Oil prices climb off 10-month lows as US stockpiles drop

Brent crude futures were 4 cents higher at $44.86 a barrel at 0219 GMT, after falling 2.6 per cent in the previous session to their lowest since August a year ago.Oil prices remained under pressure during the United States session on Tuesday with WTI testing 7-month lows just below $43.00 p/b before a limited recovery as Brent traded below the $46.0 p/b level.Output from the 14-member exporter group ticked higher in May due to rising production in Nigeria, Libya and Iraq, raising concerns about OPEC’s effort to shrink global stockpiles of crude oil.OPEC and non-OPEC oil producers’ compliance with the output deal reached 106 percent in May, a source familiar with the matter said on Tuesday.Libyan oil production rose by more than 50,000 barrels per day (BPD) to 885,000 barrels per day, after ending a dispute with a German oil company that opened two more fields, according to a Reuters source.Since May, both benchmarks are low by more than 15%, when the OPEC, other producers including Russian Federation increased their limits on output until the end of March 2018. Besides, EIA expects USA crude oil production to increase through 2018, averaging 9.3 million b/d in 2017 and 10.0 million b/d in 2018. They were at US$42.36 at 1:28 p.m. EDT (1728 GMT), down 2.6 percent.Crude held weaker in Asia on Wednesday after industry estimates on USA crude inventories painted a mixed picture with a larger than expected draw in oil stocks, but gasoline supplies up again and official data was awaited.USA crude was down 2.7% at $43.01 a barrel.The price of oil has continued to fall despite the decision just months ago by OPEC members to cut supplies to lift prices. But OPEC supplies increased in May as output recovered in Libya and Nigeria.Oil was mostly flat on Wednesday, after paring earlier losses, but was set for its biggest price drop in the first half of the year since 1997, a sign that investors are discounting evidence that major producers are sticking to a deal to cut output.Oil dropped to the lowest level in seven months, pulling energy stocks down, as Libya revives production and fuel storage levels grow.Oil has “now fallen into “bear” territory”, ANZ said in a research note.Investors were discouraged by data showing that oil refineries in China, the world’s top crude importer, are cutting operations during the peak demand summer season.