Oil prices slipped on Monday, despite news that OPEC was supportive of extending a six-month deal to cut output as investors continue to grapple with worries about growing US oil output and high inventories.
United States crude oil stocks rose to a fresh record last week, the Energy Information Administration said on Wednesday, as a surge in imports and rising domestic production more than offset a hike in refinery runs.
The Organization of Petroleum Exporting Countries (OPEC), together with other producers, including Russian Federation, has pledged to cut its output by nearly 1.8 million barrels per day (bpd) between January and June in an effort to prop up prices and rein in a global supply glut that has dogged markets for nearly three years.
Light sweet crude oil (WTI) futures declined 0.88 dollar or 1.82 percent to close at USD 47.34 a barrel at the New York-based commodity exchange NYMEX.
On March 22, 2017, at 10:30 AM EST, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending March 17, 2017.
Prices for front-month Brent crude futures, the worldwide benchmark for oil, were at $50.79 per barrel at 0451 GMT, down 17 cents, or 0.3%, from their last close.
The WTI delivery hub in Cushing, Oklahoma, could be a particular focus in Tuesday's API data.
"While oil prices are expected to recover toward the end of the year, they will remain in the $50-$60 band given the high level of stocks", Apicorp said.
Last week Tuesday, oil fell to the lows of the year, below $48, after the Organization of Petroleum Exporting Countries' monthly report showed that Saudi Arabia's output was above 10 million barrels in February.
"The market remains nervous about rising US production, which is also reducing the effectiveness of output cuts by the OPEC and some non-OPEC countries", said Abhishek Kumar, senior energy analyst at Interfax Energy in London. While OPEC won't formally decide until May whether to prolong production cuts, officials will meet this weekend in Kuwait to discuss their deal's progress.
"Crude oil prices fell as concerns over rising US inventories resurfaced", ANZ bank said on Wednesday.
Global stockpiles have risen even with OPEC-led cuts. "A blowout above the 2.1 million barrel increase expected, may well torpedo oil below the waterline", he added.
McKenna said there was a risk of oil prices dropping further due to US output and a lack of compliance by some producers who said they would cut production.
US bank Goldman Sachs warned its clients in a note this week that a USA shale-led production surge "could create a material oversupply in 2018-19".