EIA research shows that USA gasoline prices tend to follow the price of the best grades of oil in Europe, more than they follow the price of the best US crude. February crude rose 21 cents, or 0.3%, to $63.17 a barrel on the New York Mercantile Exchange, down from $63.35 before the supply data. March Brent fell a penny to $69.25.
The oil market has been buoyant for weeks, with USA crude futures at highs not seen since late 2014, and Brent crude less than US$1 per barrel away from a similar milestone.
While the global market is balancing, there are still more than 100 million barrels of surplus inventories that need to be cleared, according to United Arab Emirates Energy Minister Suhail al-Mazrouei. Brent crude futures traded 55 cents lower at $68.71 a barrel at 1253 GMT.
Despite the rising production, oil prices edged higher on Tuesday, with US crude touching its highest since December 2014. WTI was down 0.61 percent to $63.41 per barrel.
Contributing to the difference between production and consumption was a 200,000 b/d decrease in oil production by the Organization of Petroleum Exporting Countries.
Oil producers may be enjoying oil prices at $65 to $70, but these price levels are likely to encourage even more oversupply from USA shale, Fatih Birol, the Executive Director of the International Energy Agency (IEA), said at an industry event on Friday.
Production cuts led by oil cartel Opec and Russian Federation, which started in January previous year and are set to continue throughout 2018, have underpinned prices.
US energy companies added 10 oil rigs this week, the biggest increase since June, bringing the total rig count to 752, the most since September, General Electric Co's (GE.N) Baker Hughes energy services firm said.
But Fatih Birol, head of the International Energy Agency, warned on Friday that while oil prices at $65 to $70 per barrel are good for oil producers now, there is a risk that such a level would encourage more oversupply from US shale drillers.
Fatih Birol, head of the International Energy Agency, said on Friday that oil prices at $65 to $70 a barrel risked encouraging more oversupply from USA shale drillers.
"If you look at any kind of momentum indicator this is telling you this is way overbought", said Robert Yawger, director of energy futures at Mizuho in NY. This is the first STEO to forecast through 2019 and it contains updates for 2018 forecasts.
USA commercial crude stocks C-STK-T-EIA fell by nearly 5 million barrels in the week to January 5, to 419.5 million barrels.
Later-dated futures trading lower than the spot price is known as backwardation, and is expected to inhibit production because it implies a lower price for future barrels sold.