OPEC sees rivals' oil output rising as it over-delivers on cuts

USA tight oil production is expected to increase quickly in 2017, as the country is pumping more oil when OPEC is trying to rebalance the market, OPEC Monthly report showed on Wednesday.

"U.S. tight crude output is expected to rise quickly and increase 335 tb/d for the overall of 2017", the report said, as the main component of USA oil output - tight oil - is forecast to grow by at least 0.34 million bpd in 2017. Likewise, gasoline stockpiles dipped by 3 million barrels and distillate fuel oil, used to make diesel and heating oils, fell another 2.2 million barrels, according to weekly U.S. Energy Department data.

Brent oil gained for an eighth straight session on Wednesday, having recovered almost all last month's losses, after Saudi Arabia was said to be pushing its fellow members of the Organization of the Petroleum Exporting Countries and some rivals to prolong supply cuts beyond June.

U.S. West Texas Intermediate (WTI) crude futures were down 13 cents at $53.27 a barrel.

Saudi Arabia, de-facto leader of the Organization of the Petroleum Exporting Countries, has told other producers that it wants to extend the coordinated production cut beyond the first half of the year, the Wall Street Journal reported. The non-OPEC producers oil output is also expected to grow in 2017.

"What they're losing in market share the U.S.is looking to pick up", said Oliver Sloup, market analyst at iitrader.com "I don't think there's much room above $55".

"The main question is what OPEC will decide".

Saudi Arabia is the largest producer of OPEC.

This takes it below a target included in an output reduction deal by OPEC and some non-OPEC producers including Russian Federation which came into force on January 1 for an initial run of six months.

USA didn't join the oil output reduction.

In the report, OPEC pointed to an increase in its members' compliance with the deal and said oil stocks in industrialised nations fell in February - although they are still 268 million barrels above the five-year average.

"With the pick-up in drilling activity, as well as increasing cashflows in the tight oil industry, US tight crude output is expected to rise quickly and increase 335,000 bpd for the overall of 2017", OPEC said, using another term for shale.

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