The US government cut its crude production outlook for the next year and as fuel inventories plunged.
Oil prices surged nearly 2 percent on Tuesday along with rising gasoline and heating oil futures after a report showed European product stockpiles fell despite an increase in refinery crude runs.
LONDON, July 11 (Reuters) - Oil prices fell on Tuesday as global oversupply encouraged several banks to cut their forecasts for crude for this year and 2018. West Texas Intermediate, the USA benchmark for the price of oil, was up 1.9 percent to $45.92 per barrel.
Those price increases came ahead of weekly data expected to show USA crude stocks fell 2.9 million barrels while gasoline and distillate stocks each rose by 1.1 million barrels, according to a Reuters poll.
Lower than earlier forecast crude oil prices are expected to translate into continued low prices at the pumps for both diesel and gasoline, according to a new U.S. Energy Department report.
Oil ended higher on Tuesday, rising about 1.4%, as a lower 2018 forecast on USA crude production and speculation of possible output curbs in Libya and Nigeria fueled the strongest session gain for prices in over a week.
The expectation for lower prices will drag on US oil production in 2018, according to EIA.
Middle East brawl entered its second month as nine countries like Saudi Arabia, United Arab Emirates, Bahrain, Egypt, and Yemen has severed diplomatic ties with Qatar citing the latter's support for extremist ideas and terrorist groups, and also of meddling in other countries' affairs.
USA production rose to 9.338 mbpd in the week ended June 30, 2017, up from a week ago level of 9.25, near its 22-month high of 9.35 mbd.
US oil production is booming.
American oil and gas companies have improved drilling methods and focused on their best wells in order to operate in a tough price environment.
"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. This has prompted more talk among producers about including them in the pact. However, the rise of electric auto technology and the re-introduction of coal as source of energy by the Trump administration in the USA might affect these projections.
"There is no (supply) cut" even for heavier grades such as Arab Medium and Heavy crude, one of the sources said.