(In MAY 17 story, corrects to remove reference to North Sea
production rise forecast, paragraph 10)
* Prices fall two days after Saudi, Russia push for extended
* Surprise rise in U.S. API crude stocks weighs on prices
* Rising North Sea, U.S. production undermines OPEC-led cuts
By Henning Gloystein
SINGAPORE, May 18 Oil prices fell 1 percent on
Wednesday after data showed an increase in U.S. crude
inventories, stoking concerns that markets remain oversupplied
despite efforts by top producers Saudi Arabia and Russia to
extend output cuts.
Brent crude futures were down 50 cents, or 1
percent, from their last close at $51.15 per barrel at 0146 GMT.
U.S. West Texas Intermediate (WTI) crude futures were
at $48.15, down 51 cents, or 1 percent.
U.S. crude oil inventories rose by 882,000 barrels in the
week ending May 12 to 523.4 million, compared with analyst
expectations for a decrease of 2.4 million barrels, data from
industry group the American Petroleum Institute (API) showed on
The fall in prices came just days after Saudi Arabia and
Russia said on Monday that they agreed the need for a 1.8
million barrels per day (bpd) crude supply cut by the
Organization of the Petroleum Exporting Countries (OPEC) and
some other producers including Russia to be extended for nine
months, until the end of March 2018.
"The vulnerability of OPEC's ... rhetoric was starkly
revealed ... with both Brent and WTI falling ... as the U.S. API
crude inventories showed an unexpected increase," said Jeffrey
Halley, senior market analyst at futures brokerage OANDA in
The extension of the supply cuts, which started in January
and were supposed to end in June, is seen as necessary by some
as they have not so far significantly tightened the market or
propped up prices.
The International Energy Agency (IEA) said on Tuesday that
commercial oil inventories in industrialised countries rose by
24.1 million barrels in the first quarter of the year, a time
during which the OPEC-led production cut was already in place.
"The agreement by OPEC to extend cuts into 2018 is
critical," said AB Bernstein in a note.
U.S. production C-OUT-T-EIA has jumped by more than 10
percent since mid-2016 to 9.3 million bpd, not far off top
producers Russia and Saudi Arabia.
Despite this, Bernstein said the OPEC-led cuts would "lead
to accelerated inventory drawdowns in 2H17," although it added
that a "return to normalized inventories will ... drag into
(Reporting by Henning Gloystein; Editing by Joseph Radford and