Tuesday, a long awaited rebalancing of the oil market was under way at a slower pace and reported that its own output in May jumped due to gains in nations exempt from a pledge to reduce supply. OPEC’s monthly report showed that its output rose by 336,000 barrels per day in May to 32.14 million barrels per day which is led by a rebound in Nigeria and Libya.
In accordance to this, the increase means OPEC is pumping more than its forecast average global demand for its crude this year, hindering efforts to reduce oversupply. However, Libyan and Nigerian output remains unstable, which means the gain may not last. OPEC said oil inventories in industrial countries dropped in April and would fall further in the rest of the year, yet a recovery in the United States was slowing efforts to get rid of the glut.
In addition, the Organization of the Petroleum Exporting Countries said in a report that the rebalancing of the market is underway, although at a slower pace, give the changes in fundamentals since December, especially the shift in the United States supply from an expected contraction to positive growth.
Oil prices gave up gains on Tuesday after the release of the report to trade toward $48 a barrel, below the $60 level that top OPEC producer: Saudi Arabia would like to see and less than half the level of mid-2014.