Oil prices dipped on Wednesday as bloated USA supplies weighed on markets while a fall in Saudi crude exports was offset by rising production in the country.
USA crude oil production has climbed to 9.24 million barrels per day, according to the latest Energy Information Administration data. However, the API also reported a counter-seasonal build of 2.254 million barrels in gasoline inventories, which weighed on market sentiment, especially given that analysts had projected a draw of 2 million barrels.
Brent crude futures LCOc1 were up 27 cents at $55.16 a barrel at 1106 GMT, while US crude futures CLc1 were up 20 cents at $52.61.
The market received a modicum of support from comments by Mohammed Barkindo, secretary-general of OPEC, that the group was still committed to cutting inventories. USA production rose to 9.252 million barrels a day in the most recent week, the highest since August 2015.
"Crude oil prices were slightly weaker as the focus turned back to US inventories and output", ANZ bank said on Wednesday.
Oil prices have dropped by around half since 2014 and now hover just above $50 per barrel. USA crude inventories were at 532.3 million barrels, only about 3 million barrels less than the record reached in March. Andrew Lipow, president of Lipow Oil Associates in Houston, said some in the market were concerned about the rapid recovery in shale production. While U.S. crude supplies fell from a record, OPEC said Wednesday in a report that rivals in the American shale patch are growing stronger.More news: Labour MP calls snap general election a 'vanity project'
TheNewsGuru.com reports that on December 10, 2016, OPEC won the backing of countries outside the oil cartel to join supply cuts for the first time since 2001, overcoming the final major obstacle for a global agreement to curb output.
Oil exports fell to 6.95 million barrels a day, the lowest since May 2015, from 7.7 million a day in January, according to data published Tuesday on the Riyadh-based Joint Organisations Data Initiative website.
"As long we do not get any negative surprises in terms of demand, the price is likely to settle back into its recent range with the upside still capped", Ole Hansen, the head of commodity strategy at SaxoBank, said in a semi-regular newsletter.
OPEC will meet on May 25 to assess markets and to decide whether to extend the deal or not.
On Sunday, Iran added fuel to hopes that OPEC and non-OPEC oil producers could extend their output cuts beyond the initial six-month agreement.