Crude drifts a tad weaker in Asia ahead of United States rig count

Crude oil prices fell almost 4 percent Wednesday after government data showed gasoline inventories and oil production increased.

U.S. inventories fell less than forecast last week, keeping supplies more than 100 million barrels above the five-year average, according to data from the Energy Information Administration on Wednesday.

OPEC said oil inventories in industrialised countries dropped in April and would fall further in the rest of the year, but a recovery in USA production was slowing efforts to get rid of excess supply.

The report also showed that gasoline inventories increased by 2.1 million barrels, compared to forecasts for a drop of 457,000 barrels.

Brent crude oil fell 30 U.S. cents to $46.70 a barrel, its weakest since May 5 and just above six-month lows, before recovering a little ground to trade at $46.80 by 7.55am GMT.

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Rising U.S. crude output has undermined OPEC-led cuts, with production up more than 10 percent in the past year.

Originally, Opec members had agreed to cut production for six months beginning from the start of the year in a bid to reduce the glut of oil supplies on the shore up prices.

Both contracts hit their lowest since May 5, driving them into technically oversold territory.

Late last month, OPEC said it would extend an 1.8 million-barrel-a-day cut to oil output by nine months, though March 2018, after the November deal failed to fully clear a global oversupply in oil, which has been keeping prices relatively low.

"The rebalancing of the market is underway, but at a slower pace", the report said, acknowledging it will take more time to tighten the supply-demand balance. Prices slid $1.72, or 3.5 percent, to $47 on Wednesday.

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A rapid rise in United States shale oil output will contribute to the increase in non-Opec supply next year, the IEA said.

This implies that crude oil price, which stood at $48.27 per barrel, last week, would increase to $51 per barrel or more, signalling a good omen for Nigeria, which depends on crude oil for its fiscal responsibilities.

The US government's Energy Information Administration has raised its prediction for domestic output growth in 2017 to 460,000 barrels per day from a predicted decline of 80,000 barrels per day in December.

The International Energy Agency stated that it expects oil supplies to be higher than demand in the next year, despite a rise in global consumption.

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