OPEC's simple problem. Despite Saudi cuts, it's shipping more oil: Russell

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The American Petroleum Institute late Tuesday had reported (http://www.marketwatch.com/story/api-data-reportedly-show-a-weekly-rise-in-us-crude-supply-2017-06-13) that crude inventories rose 2.8 million barrels last week, while analysts at Citi Futures forecast a decline of between 2 million and 3 million barrels.

USA crude inventories added 2.75 million barrels last week, while gasoline stockpiles increased by 1.79 million barrels last week, the API said Tuesday, according to people familiar with the data.

In its monthly assessment of the market, the agency said global crude inventories were 292m barrels higher than the five-year average. "I would think that at some point the market is going to be pricing in even greater risks that the Fed might be moving too quickly", said Mark Cabana, a rates strategist at Bank of America Merrill Lynch in NY.

The agency repeated the advice it has given in previous reports, that those hoping for the market to come back into supply-demand balance should expect it to take some time on current policy.

Last month, Iran exported about 1.1 million bpd to Europe including Turkey, nearly reaching pre-sanction levels and only slightly below the 1.2 million bpd supplied to Asia, the source said.

Benchmark Brent crude LCOc1 was 17 cents lower at $48.12 per barrel by 1236 GMT, reversing gains made earlier in the session when it edged up to $48.67.

The production cuts have been extended for another nine months.

The EIA's reported decline in crude supplies was "a welcomed sight after [Tuesday's] API report, but today's report on the whole was still quite bearish", said Troy Vincent, oil analyst at ClipperData.

"Crude oil is still struggling to rebound", said Olivier Jakob, strategist at Petromatrix, adding that Opec's gradual approach to rebalancing was giving U.S. producers time to drill new wells that were undermining the impact of the group's cuts.

Shale supply has pushed USA crude production up by about 10 per cent over the a year ago to 9.3 million bpd - not far below the output of top exporter Saudi Arabia.

Oil inventories are near record highs in some parts of the world, and producers outside the OPEC deal are increasing output.

Oil inventories in developed nations remain higher than before OPEC started cutting production.

Crude oil futures fell Wednesday morning, after weekly industry data showed a surprise build in us stockpiles.

Low oil price will lead to rippling effect in the global market.

The U.S. alone will account for about half that increase in supply, the IEA said.