OPEC and non-OPEC oil producers' compliance with a deal to cut global outputs have reached its highest in May since they agreed on the curbs last year, reaching 106 percent last month, a source familiar with the matter said on Tuesday.

The Organization of Petroleum Exporting Countries (OPEC) were mulling over the possibility of increasing their production cuts due to the larger-than-expected output coming from the U.S., Iranian oil minister Bijan Zanganeh said on Wednesday.

"The U.S. oil production increase was unpredictable and this increase is more than what OPEC members had foreseen," Zanganeh admitted, according to a report from Iranian state broadcaster IRIB.

Although the crude futures markets have dropped in the recent times on the back of another disappointing set of US inventory data, we retain a cautious view on the prospects for oil markets in 2018, with Brent forecast to average $45/bbl next year, the current market developments are materially more bearish than we have expected.

Stay long the August 2017 WTI futures contracts.

We remain long the August WTI future outright position. Another set of generally disappointing weekly US data obfuscates that fact that Cushing inventories have fallen consistently over the past nine weeks.

Cushing draws should continue to reduce extremely high inventory levels and support WTI pricing more than Brent.

Went long August 2017 WTI futures contract on June 9, 2017, at $46.07/bbl.

Marked to market at $45.02/bbl on 16 June, for an unrealized loss of $1.05/bbl. Trade target is $50/bbl with a stop at $44/bbl.