Expert warns Oil may touch $30

Supply grew by 585,000 bpd last month alone, with the rapid return of U.S. shale adding to strong gains from Opec's exempt members, Libya and Nigeria.

Fesharaki, an expert in the energy market and an academic warned that the world may witness a drastic fall in price of a barrel of Oil to $30 if the OPEC failed to cut production.

Crude inventories fell 1.7 million barrels in the week to June 9, compared with analysts' expectations for a decrease of 2.7 million barrels, as imports fell 481,000 barrels per day.

OPEC's plan to cut production and support prices is likely to be undone by increased output in the US, the International Energy Agency predicted Wednesday. USA crude was 45 cents lower at US$46.01.

Oil prices are trading lower this afternoon.

But those efforts have been blunted by a massive boom in production by US shale operators, who have become much more efficient.

The speed and scale at which USA shale production has bounced back from the slump in 2015/16 has confounded OPEC and all the other major forecasters.

Meanwhile, the IEA issued a warning that the global oil glut looks set to last through 2017 despite Opec's move, in concert with 10 non-Opec producers, to take 1.8m barrels per day (bpd) of production out of the market.

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An uptick in production from both Nigeria and Libya was singled out as the reason the market was rebalancing at a "slower pace", as both nations are exempt from supply cuts. The majority of non-OPEC countries registered substantial declines in their 2016 average crude production, as compared to 2015.

According to IEA's June market report, total OECD oil stocks in April grew by more than the seasonal norm, and have risen so far this year by 350,000 bpd.

On Wednesday, the drop down has been seen in oil prices after industry data showed an increase in us crude stocks.

"The numbers cast serious, serious doubt on whether there will be another hike this year", said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in NY.

"As a result, oil inventories remain high, particularly in the US-a key factor behind persistent weakness in oil prices", pointed out a World Bank report on Global Economic Prospects. The U.S. Energy Information Administration says that figure will likely rise above 10 million bpd by next year, challenging top exporter Saudi Arabia.

Shale producers have continued to add rigs even as prices have fallen because most of their production for 2017 had already been hedged at higher price levels (http://tmsnrt.rs/2ssekIv).

"With the typically tighter second half of the year fast approaching, rumours of oil prices having found their bottom are doing the rounds", PVM Oil Associates analyst Stephen Brennock said in a note.

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