Oil prices slipped back to three-month lows on Wednesday after data showed US crude inventories rising faster than expected, piling pressure on the Organization of the Petroleum Exporting Countries (OPEC) to extend output cuts beyond June.
A deal between OPEC and some non-OPEC producers to reduce output by 1.8 million barrels per day (bpd) in the first half of 2017 has had little impact on bulging global stockpiles of oil.
Benchmark Brent crude was down 82 cents at $50.14 per barrel at 0936 GMT, after dropping to $50.05, its lowest level since OPEC announced on Nov. 30 its plan for cuts. The deal with non-OPEC states was reached in December. US light crude was down 70 cents at $47.54 a barrel, also slipping towards a three-month low.
“The lower the price goes, the higher the pressure on OPEC to extend cuts,” Commerzbank analyst Carsten Fritsch said.
Sources have said OPEC is inclined to extend but wants backing from non-OPEC producers, including Russia, even though such countries have yet to deliver fully on existing cuts.
On Tuesday, the American Petroleum Institute (API) reported US inventories climbed by 4.5 million barrels to 533.6 million last week, a bigger rise than the 2.8 million analysts forecast.
US shale oil producers have been adding rigs, pushing up the country's oil production to about 9.1 million bpd, from around 8.5 million bpd in late 2016.
“OPEC’s market intervention has not yet resulted in significant visible inventory drawdowns, and the financial markets have lost patience,” US bank Jefferies said in a note.
The bank said OPEC-led cuts would start having an impact in the second half of 2017, but added that US crude production was expected to grow by 360,000 bpd in 2017 and 1 million bpd in 2018.
US bank Goldman Sachs warned its clients in a note this week that a US shale-led production surge “could create a material oversupply in 2018-19.”

Source: Arab News