A surge in USA production is a major threat to OPEC's effort to reset the still-oversupplied global oil market.
Oil prices regained some ground on Thursday after steep losses the previous day, with a slight drop in US crude inventories stoking hopes that a global supply overhang might slowly retreat.
United States commercial crude oil inventories fell by ~2.2 MMbbls (million barrels) in the week ending April 7, 2017.
Brent for June settlement fell $1.96, or 3.6 percent, to $52.93 a barrel on the London-based ICE Futures Europe exchange.
USA crude futures settled down US$1.97 to US$50.44 a barrel, a 3.8 per cent drop, the worst-one day decline since March 8, as investors bailed out of long positions in response to the bearish inventory figures.
US crude stocks fell 1 million barrels on the week, according to the US Energy Information Administration, a bit less than anticipated. Crude production and refinery operations rose in the week ended April 14. Also, U.S. production rose to 9.252 million barrels a day in the most recent week, highest since August 2015.More news: Corbyn ridicules 'Lib Dem prisoner' May in election debate
"There's been a lot of attention paid to OPEC production cuts, while nearly nobody has focused on the gains elsewhere", Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania, said by phone.
He said the UAE had reduced its oil production by over 200,000 barrels per day in March compared with October 2016, expecting that the six-month production cut there would be averaging at least 140,000 barrels per day in line with the UAE's compliance with the agreement.
USA crude futures tumbled following the EIA data release, off $2.7% to $51 a barrel.
Refineries processed 16.9 million barrels a day, up 241,000 barrels from the prior week and the highest since the record 17.1 million was touched in January. Andrew Lipow, president of Lipow Oil Associates in Houston, said some in the market were concerned about the rapid recovery in shale production. "Refinery maintenance is finishing, which is leading to greater processing of crude, and the OPEC cuts are going to finally have an impact on US inventories".
Stocks have dropped sharply in the last several weeks and have fallen below levels seen at this time a year ago, but are still higher than where inventories have been in this decade.