Crude futures were little changed Monday morning in US trading, as signs of steady US drilling activity and rising Libyan output helped offset a drop in reported crude exports from Saudi Arabia.

At 1504 GMT, NYMEX July crude was 10 cents higher at $44.84/b. ICE August Brent was up 18 cents at $47.55/b.

NYMEX July ULSD was up 39 points at $1.403/gal. NYMEX July RBOB was the strongest part of the oil complex, up 1.15 cents at $1.4663/gal.

Saudi Arabia’s energy minister, Khalid al-Falih, said Monday that global oil market fundamentals are “moving in the right direction,” but erasing the large surplus of crude held in storage will take time.

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Market participants have overlooked the decline in OECD stocks of 65 million barrels from their peak in July 2016, focusing instead on US inventory levels declining at slower-than-expected rates, he told Asharq al-Awsat newspaper.

One factor limiting the extent of US crude draws has been domestic production, which has risen 560,000 b/d so far this year.

The steady rise in the US oil rig count has fueled expectations that production will continue to rise for the foreseeable future.

The number of rigs drilling for oil in the US has increased 22 straight weeks to 747 Friday, up 222 since the end of 2016 and the highest level since April 2015, according to Baker Hughes.

Greater US production has countered efforts by OPEC members, led by Saudi Arabia, to tighten global oil market through supply cuts that went into effect January 1 and last through March 2018. Saudi Arabia’s exports averaged 7.006 million b/d in April, down 226,000 b/d from March, according to data published Monday by the Riyadh-based Joint Organizations Data Initiative.

The first four months of the year showed Saudi exports averaging 7.227 million b/d, which was 366,000 b/d lower than the same period in 2016.

Another source of rising supply has been Libya, where the Sharara oil field came back online June 8, and has reached 270,000 b/d, the same level as before being shut in late May because of worker protests, the state-owned National Oil Corp. said Monday.

Overall, output from Libya has been on the rise, averaging 730,000 b/d in May, its highest monthly output since October 2014, according to the S&P Global Platts OPEC survey.

The inability for OPEC supply cuts to tighten the global supply-demand balance has renewed downward pressure on the oil complex since late May.

Front-month crude futures fell sharply last week, bringing prices close to year-to-date lows set May 5 in overnight trading.

“Here’s the latest indicator of how much the oil market has changed now that it has the excess-supply buffer: six years ago when the Syrian civil war was starting, concerns over the conflict helped push oil from $85 to $114/barrel,” TAC Energy said in a note.

“Yesterday, the Pentagon said that the US actually shot down a Syrian government jet for the first time, and prices didn’t flinch,” it said.

–Geoffrey Craig,

–Edited by Annie Siebert,

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