Fed report, lower U.S. oil production lift oil prices higher

Oil price may affect 2017 budget implementation –Kachikwu

Oil slides back towards 2-week lows as focus turns to US stockpile data

Tuesday's revised short-term energy outlook report from the EIA showed a lower production forecast for 2018 to 9.9 million barrels a day, slightly down from around 10 million before.

This means that further declines in USA inventories would provide some support to oil prices, however, any future buildup in inventories would result in declines in oilrig count, and hit both USA output and prices.

Oil prices climbed more than 1 percent on Tuesday along with rising heating oil futures on reports showing forecast cuts in US oil production and a decline in European product stockpiles.

USA heating oil HOc1 futures, meanwhile, gained 1.6 percent on Tuesday, boosting the products crack spread CL321-1=R , a measure of refinery margins, to the highest since late May.

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NOC Chairman Mustafa Sanalla added Libya could assist with efforts to stabilize the market by informing OPEC about its plans to restore production. USA rig counts rose by 7 units to 763 units last week, the highest level since April 2015.

The U.S. Energy Information Administration will release its official weekly oil supplies report at 10:30AM ET (1430GMT). U.S. West Texas Intermediate crude CLc1 rose $1.31, or 2.9 percent, to settle at $45.71 per barrel.

"OPEC has broken the ice in reaching out to shale producers in the U.S.", Barkindo told reporters on the sidelines of the World Petroleum Congress, of which Anadolu Agency is the global communication partner. The oil glut, of which the USA shale boom in the US has contributed to, reduced oil prices and the revenues of oil producing economies.

The US could quadruple its crude oil exports by 2020 in a move that will seriously impact OPEC's hold on the global market.

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Gasoline was also trading up on the day, by 1.46% at $1.5181. Gasoline production was down 4.4 million barrels a day year over year and distillate (diesel fuel and heating oil) production rose almost 600,000 barrels a day compared to the same time last year.

Distillate stockpiles, which include diesel and heating oil, rose 3.1 million barrels, versus expectations for a 1.1 million-barrel increase, the EIA data showed. Crude oil is used to generate electricity for air conditioners during the summer.

USA production is expected to increase in 2018, albeit at a lower rate than previously estimated.

"Even if OPEC countries cut their production further and even if this causes prices to go up for a while, USA production will come to pressure the prices once again", Birol said.

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Renewables: "U.S. electricity generation from renewables is expected to increase 12% this year and then remain steady in 2018 due mainly to a drop in hydropower next year".

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