The market is on a recovery track due to rising global demand, Kuwait's Organisation of the Petroleum Exporting CountriesGovernor Haitham Al-Ghais told Reuters.
While the OPEC-led cuts have offered prices some support, rising supplies from Nigeria and Libya, two OPEC members exempt from the pact, have weighed on the market, as has growth in U.S. shale production.
A slowdown in the increase of new American drilling rigs has seen the oil price edge up to nearly $49 a barrel and has boosted hopes that the market may be about to restructure itself. My take? The world is tantalisingly near a short-term bottom in crude oil prices.
This added to an IEA report raising its demand estimate.
On the inventory side, EIA data showed that oil inventories fell by 7.6 million barrels and total stocks have dropped below 500 million barrels for the first time since late January. Non-OPEC supply forecasts also continue to be revised upwards.
The Senior Analyst at Interfax Energy's Global Gas Analytics Abhishek Kumar said in London: "U.S. gasoline demand remains lackluster and gasoline stocks are still above the five-yea average, which will cap gains in crude and gasoline prices".
Asian traders are selling oil products out of tanks amid soaring demand, while the EIA reported the largest drop in us crude oil inventories in the week to last week in 10 months.
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Brent crude futures were at $49.02 per barrel at 0656 GMT, up 11 cents, or 0.2 percent, from their last close.
In retrospect, the Opec's output cut was not big enough to "shock and awe" the oil bears, especially since Russian Federation pledged to cut output by a mere 300,000 barrels.
By 2018, USA shale oil will become one of the top ten exporters of oil in the world. Companies like Devon Energy (NYSE: DVN) have reported expectation-thrashing production results.
Even though the news about higher OPEC production made more headlines in the past weeks, but oil traders are said to be at ease with the situation because of the of IEA reports, which note oil demand is growing faster than previously expected.
Meanwhile, Concho Resources (NYSE: CXO) and Marathon Oil (NYSE: MRO) both delivered guidance-beating first quarter production. "The United States will later this year or early next year reach the highest production in its history". Forecasts like those led the EIA to increase its USA oil production estimate, which it now sees averaging 9.3 MMbpd this year, an increase from 8.9 MMbpd last year. A decline in global oil inventories has now begun.
"The renewables still have major challenges and they do not compete with oil", he said. For example, Harrold Hamm, the CEO of Continental Resources (NYSE: CLR) warned his peers in a recent interview with CNBC to "back up, and be prudent and use some discipline.That's what we're doing at Continental and there are other CEOs I think that are probably doing the same thing". "The energy transition underway will be a long, complex process", he added.