There is a strong probability that USA production will increase again and a sharp draw in inventories will be needed to boost overall sentiment.
USA crude futures tumbled following the EIA data release, off $2.7% to $51 a barrel.
American Petroleum Institute (API) reported that U.S. markets continue to remain oversupplied though crude inventories slipped by 840,000 barrels in the week up to 14 April to 531.6 million barrels.
China's March gasoline output rose 2.5% year on year to 11.24-million tonnes, the highest level since at least April 2014, data from China's National Bureau of Statistics showed on Wednesday, adding fuel into an Asian market that is already well supplied.More news: Gold medalist, bridesmaid in the lead for the green jacket in Augusta
OPEC members agreed in November to cut production by 1.2 million barrels per day (bpd) for six months beginning from the start of the year. USA rig counts are up for 14 straight weeks returning output to levels not seen since April 2015. The less-volatile four-week moving average declined 4,250.
"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.
However, Saudi production rose to 10 million bpd in February, up from 9.75 million bpd the previous month, the Jodi data showed, as domestic refiners processed more crude oil. Russian Federation and 10 other non-OPEC producers agreed to cut half as much.The accord has lifted oil prices, which are near $55 a barrel. "There was also a large jump in refinery capacity utilization ahead of the peak summer driving season". US inventories of 532 million barrels remained near all-time records reached in March.
"We should see an accelerating level of crude draws, something we've been waiting for a while", Cavan Yie, senior equity analyst at Manulife Asset Management Ltd.in Toronto, said by phone. June WTI crude oil futures fell 3.7% and settled at $50.85 per barrel on April 19, 2017.
The Organisation of the Petroleum Exporting Countries (OPEC) is confident that production cuts agreed with non-members to prop up prices will lead to a recovery in the market, its chief said on Wednesday.