Crude oil prices edged higher Wednesday, with gains capped by concerns that USA production was undermining the Organization of the Petroleum Exporting Countries' efforts to rebalance the market.
The price for Brent crude oil was up about 0.45 percent a half hour before the start of trading in NY to $51.88 per barrel.
That boosted oil prices immediately after the data, with West Texas Intermediate crude futures bouncing to a high of $49.50/bbl before retreating modestly. While Saudi Arabia and Russian Federation said this week they're in favor of prolonging them to March next year, they could lose even more market share to producers like Nigeria and Libya that are exempt, according to Saxo Bank A/S.
The bank said that it expects compliance may falter if the deal is extended, however, as OPEC countries face losing further market share to USA shale oil producers.
USA crude stockpiles gained 882,000 barrels in the week ended May 12, the API was said to report on Tuesday.
Gasoline stocks fell by 413,000 barrels, compared with analysts' expectations for a 731,000-barrel drop.
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Crude markets are getting some encouragement from the U.S.as supplies fell for a sixth week - a sign that OPEC-led production curbs are starting to be felt in the world's biggest oil-consuming nation.
However, the drawdown was smaller than expected, and many traders say there is still more oil in the system than the market can absorb. "Also (the crude) is available at discounts so it is value for every dollar that we spend", said M. K. Surana, chairman of Hindustan Petroleum Corp.
US production has been steadily rising since the start of the year, reaching its highest level since August 2015 at 9.31 million barrels a day earlier this month.
The U.S. operators have built up a new inventory of drilled uncompleted wells (DUCs) as the rig count recovery has been outpacing completion growth since the second half of 2016.
Imports dropped 644,000 barrels per day (b/d) to 7.62 million b/d, averaging 8.1 million b/d year to date, versus 7.8 million b/d over the same period in 2016, exceeding the year-ago level despite OPEC-led supply cuts being in place.
Meanwhile, members of the Organization of the Petroleum Exporting Countries, such as Kuwait, Iraq, Oman and Venezuela, have reportedly said they supported an extension to the supply cuts, signaling that the meeting next week will go smoothly.