OPEC sees more oil supply outside the group, countering its cuts

The industry group the American Petroleum Institute reported a fall in USA crude inventories by 5.8 million barrels last week, which was more than the 1.8 million-barrel slide analysts predicted.

Also supporting prices were comments from Algeria's energy minister on Wednesday that Algeria and Iraq favour extending global supply cuts when OPEC meets later this month. United States light crude oil was 45 cents higher at $46.33 a barrel.

Meanwhile, gasoline inventories dropped by only 0.150 million against expectations for a draw of 0.538 million barrels while distillate stockpiles fell by 1.6 million barrels, compared to expectations of a 1 million decline.

Global oil prices recently dipped briefly under USD 50 dollars per barrel for the first time since OPEC and Russian Federation scaled back output as concerns whether the deal would be renewed and the impact of rising output in the United States weighed on the market.

"U.S. crude oil production is now solidly above 9.3 million barrels per day with more to come, and refined product, especially for gasoline, is oddly weak", John Kilduff, partner at hedge fund Again Capital in NY, told Reuters.

By 11:12 a.m., US crude futures CLc1 were up $1.30, or 2.8 percent, at $47.18 a barrel, and Brent crude LCOc1 rose 2.5 percent, or $1.25, to $49.98 a barrel.

Notably, U.S. crude production continued to climb, rising to 9.31 million bpd, from 9.29 million bpd the week earlier.

WTI was on track to post its best performance since November 30, the day the Organization of the Petroleum Exporting Countries agreed to cut their production to reduce brimming global crude stockpiles.

An extension of the deal would push supply down even further in the second half of the year, the IEA's Neil Atkinson said at the Platts Crude Oil Summit in London on Wednesday.

The larger-than-expected drop came alongside weaker imports, which averaged over 7.6m barrels per day last week, down by 644,000 barrels per day from the previous week. It is done as a part of OPEC's understanding to low production.

Oil major Saudi Aramco has told Asian refiners it will reduce supplies by about seven million barrels in June.

Oil prices pared gains on Thursday after the release of the report to trade at less than $51 a barrel LCOc1 , below the $60 level that top OPEC producer Saudi Arabia would like to see.

  • Zachary Reyes