Oil prices were lower on Tuesday after a report from the Organization of the Petroleum Exporting Countries (OPEC) showed that the market will rebalance at a “slower pace.”
The OPEC report also showed an uptick in May’s output. This was due to increased production by countries exempt from the output reduction.
In its monthly report, OPEC said its output reached 32.14 million barrels per day in the month of May, an increase of 336,000 barrels per day.
Oil inventories in industrialized countries fell in April, but increased output in the United States was offsetting efforts to curb the global oversupply.
U.S. West Texas Intermediate crude fell to $45.91 per barrel, down 0.4%, or 16 cents. Brent oil fell to $48.17 per barrel, down 12 cents.
In May, OPEC and a handful of non-OPEC producers extended the agreement to reduce output by 1.8 million barrels per day until March 2018.
OPEC Report Notes High Compliance
The OPEC Report noted the high compliance rate among members who are part of the agreement. Stocks in OECD nations declined in April, but are still hovering at 251 million barrels above the five-year average.
Output from 11 OPEC members that are part of the agreement averaged 29.729 million barrels per day. This means that compliance rates has remained above 100%.
The output reduction deal thus far has done little to curb the oversupply, as production in the United States has skyrocketed.
Drillers in the U.S. added new rigs for the 21st straight week, the longest streak on record. Eight new rigs were added. The total number of rigs is now 741.
Investors are now looking forward to weekly data on stockpiles in the U.S. The American Petroleum Institute due later today. The Energy Information Administration will release the official stockpile data on Wednesday. Analysts are projecting a stockpile reduction of 2.9 million barrels.