Oil slides 3.8 percent to two-week low on United States gasoline build
"They drop production, we add production, and so at end of the day it's ugly", said Robert Yawger, energy futures strategist at Mizuho Americas.U.S. production rose to 9.252 million barrels a day in the latest week, highest since August 2015.
OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russian Federation, to cut oil output was likely to be extended beyond June.
U.S. Oil prices were down almost 4% through the afternoon on Wednesday and now hover just above the $50 a barrel mark. WTI rallied more than 1% early on Thursday after Saudi oil minister Khalid Al-Falih suggested major oil producers could extend their agreed upon cuts.
USA crude for May delivery recently traded up 2 cents, or 0.04%, to $50.46 a barrel on the New York Mercantile Exchange.
The sharp drop also came on the back of recent data, including a 13th consecutive weekly rise in US rigs drilling for oil and a forecast for higher domestic shale output in May, that imply the USA will continue to add to global supplies even as OPEC and its allies curb production under a six-month pact that kicked in at the start of the year. "Compliance among Opec member countries has been very high to cut output to rebalance oil markets in the first three months of the deal", said Mohammad Barkindo. A surprise build in gasoline inventories pressured gasoline prices, which in turn pressured crude oil (IXC) (IYE) (SCO) (IEZ) prices on April 19, 2017. According to a report on monthly drilling productivity report by the Energy Information Administration, the output of crude from shale plays will increase to a level of 5.2 million barrels per day next month. Crude prices also fell, despite a draw in crude inventories.
"Rising U.S. production levels are offsetting more than a third of the six-month agreement of the 1.8 million barrel-per-day cut", McGillian said.
Patrick Pouyanne, chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year, citing USA shale production.
"Over the last four weeks, the country's crude oil imports averaged over 7.9 million barrels per day, 2 percent above the same four-week period past year", said EIA.